Southeast Asia Outlook 2024

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OPPORTUNITY BECKONS

Southeast Asia Outlook 2024: Opportunity Beckons

CUSHMAN & WAKEFIELD

A BETTER YEAR AHEAD RESILIENCE AMIDST UNCERTAINTY

The Southeast Asia (SEA) economy is expected to grow by 4.6% in 2024, faster than 2023’s growth of 4.0%. Most major economies in SEA are expected to accelerate in 2024, with exception to Indonesia, which would still see decent growth of 4.9% in 2024. SEA has weathered the heightened inflation and interest rate environment remarkably well. Private consumption, a key contributor to economic growth in SEA (private consumption typically contributes more than 50% of GDP in emerging SEA) has been resilient, supported by low unemployment rates, steady consumer confidence and pent-up demand.

Easing inflation and financing costs should be conducive for higher investments into SEA as investors look for higher returns in a fast-growing region. An expected pick-up in global exports, continued recovery in regional air travel and resilient domestic demand would bolster SEA growth in 2024. Nonetheless, uncertainties remain. This includes a slowing Chinese economy which drives about 15% of the regions’ exports, potentially escalating geo political conflict and oil prices, which could fuel higher inflation in net energy importer countries such as Singapore, Thailand and Philippines. Also, while there is continued optimism about the downward trend of global interest rates, the pace and timing of interest rate cuts remain uncertain. Interest rates in 2024 are likely to stay higher than pre-pandemic levels.

SEA ECONOMIC GROWTH LARGELY EXPECTED TO ACCELERATE

PRIVATE CONSUMPTION REMAINS RESILIENT AMIDST LOW UNEMPLOYMENT

2023

2024F

2025-2030F AVERAGE

PRE-PANDEMIC AVERAGE (2015-2019)

80%

60%

Thailand PRIVATE CONSUMPTION GROWTH (YOY%) 4% 2% 0%

40%

20%

PROPORTION OF PRIVATE CONSUMPTION TO GDP

Vietnam

Malaysia

Philippines Indonesia

Singapore

GDP GROWTH (%)

Proportion of Private consumption contribution to GDP Consumption Growth (Pre-pandemic Average 2015-2019) Consumption Growth (2023)

Vietnam Philippines

Indonesia Malaysia Thailand Singapore China

USA Euro Zone

KEY SEA ECONOMIES

Source: Moody’s Analytics, Cushman & Wakefield Research

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SOUTHEAST ASIA TO RIDE ON GLOBAL MANUFACTURING RECOVERY MANUFACTURING RECOVERY

With the global economy on course for a soft landing, global manufacturing activity should pick up as consumer pent-up spending on services normalises back towards goods amidst lower inventory surpluses. This bodes well for SEA given that majority of exports (77% as of 2022) are from outside of SEA. The pace of recovery will depend on China, United States, Europe and Japan which drives about close to 50% of exports in SEA. That said, economic growth in the United States, Mainland China and Europe in 2024 are expected to moderate, suggesting a gradual rebound in SEA manufacturing exports.

Purchasing Managers’ Indices (PMI), a barometer of manufacturing activities, are largely showing signs of improvement. While not all PMI levels across the region are in positive territory, export-oriented countries such as Singapore, Vietnam and Malaysia have seen improvements in PMI readings over the last 6 months of 2023, suggesting improving momentum for

manufacturing and exports. Notably, Thailand PMI deteriorated in December 2023, driven by a contraction in manufacturing output and lower business confidence. That said, we anticipate a pick-up in manufacturing sentiments in Thailand in 2024, given continued investments in electronics and electric vehicle manufacturing.

MANUFACTURING ACTIVITIES SHOW SIGNS OF IMPROVEMENT

SHARE OF ASEAN MERCHANDISE EXPORTS IN 2022

-1

Mainland China 15 %

Intra-ASEAN 23 %

-2

-3

-4

-5

PURCHASING MANAGERS INDEX NET BALANCE (NEUTRAL = 0)

Indonesia

Philippines

Singapore

Vietnam

Malaysia

Thailand

United States 15 %

EU -27 9 %

JUN-23 DEC-23

Source: ASEAN Secretariat, ASEAN stats database, Trading Economics, Cushman & Wakefield Research

Other Partners 32 %

Japan 7 %

Source: ASEAN Secretariat, ASEAN stats database, Trading Economics, Cushman & Wakefield Research

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INFLATION CONCERNS TO RECEDE

Source: Moody’s Analytics, Cushman & Wakefield Research

SIGNS OF OPTIMISM INFLATION AND INTEREST RATES EXPECTED TO COOL

THE END OF INTEREST RATE HIKES

COUNTRY Philippines Singapore Indonesia

TYPE

Overnight Lending Rate

Inflation concerns are expected to recede in SEA, with inflation poised to fall across most markets. The effects of supply chain disruptions and energy price shocks have receded. Also, with US interest rates cuts expected in 2024, devaluation pressures on SEA currencies have eased, leading to stabilising import prices and cooling inflation. Nonetheless, inflation risks remain due to potential oil and food price shocks given global geo political tensions. Singapore, Thailand and Philippines are net energy importers. And SEA has a high dependency on soybeans and wheat imports. Most SEA wheat imports are from Russia and Ukraine. Over the short term, the risk of a sharp and prolonged economic downturn have come down significantly. With inflation slowing, there is more leeway for monetary authorities to loosen financial conditions, if necessary, to support economic growth and mitigate potential downside risks. In a bid to boost growth, Vietnam’s central bank has already started to cut policy rates in 2023, with another cut potentially on the cards in 2024. That said, most central bankers have so far (as of end Jan 2024) announced intentions to hold rates steady and are adopting a watch and wait approach.

SORA- Overnight

Central Bank Policy Rate Central Bank Policy Rate

Thailand Vietnam Malaysia

Refinancing Rate Central Bank Rate

Source: Moody’s Analytics, Cushman & Wakefield Research

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STEADY INVESTMENTS

Despite a heightened interest rate environment, SEA property investment sales held steady in 2023, similar to levels in 2022. Total investment sales in 2023 reached US$16.0 billion. Singapore investment sales drove most volumes (77% of 2023 sales), though emerging SEA took a larger share of volumes in 2023 with an increase in investment volumes seen for Malaysia, Indonesia and Philippines. In Singapore, transaction volumes was driven by a slew of suburban retail mall sales while in Malaysia, industrial investment sales dominated. Across Indonesia, Vietnam, Philippines and Thailand, a slew of retail and hospitality deals were observed, as investors bet on recovering tourism and resilient domestic consumption.

Investors have taken a renewed focus on the retail market, particularly in Singapore, with retail investment volumes overtaking office for the first time in a decade. SEA retail investment sales contributed slightly more than one-third of investment sales volumes, with an equal split between offices and industrial properties. This trend was skewed towards Singapore which saw the completion of several suburban prime retail mall transactions (value-add opportunities) in 2023.

Excluding Singapore, investment volumes skew sharply towards the industrial market, as investors bet on new economy assets and sectors. For example, in Malaysia, industrial volumes was driven by a US$0.4 billion-dollar investment by Malaysia’s sovereign wealth fund and state-owned institutional investors into Osram Opto Semiconductors manufacturing facility.

SALES RETAIL TOPS INVESTMENT SALES

RISING INVESTMENT SALES

INVESTMENT SALES IN 2023 BY PROPERTY TYPES

Note: Excluding devt sites Source: RCA, Cushman & Wakefield Research

Southeast Asia Outlook 2024: Opportunity Beckons

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LONG-TERM DRIVERS LARGE MARKET POTENTIAL

STEADY LONG TERM ECONOMIC AND POPULATION GROWTH Indonesia offers huge market potential given her population size and fast growing economic growth. Fueled by increasing urbanisation and a large pool of young population, Philippines is poised to see stand-out economic and population growth.

URBANISATION AND DIGITALISATION POTENTIAL SEA has delivered robust growth and has potential to grow further. According to the e-Conomy SEA report 2023, SEA has achieved about US$100 billion in revenue in 2023 or grown 8 times over the past 8 years, across all digital sectors such as e-commerce and digital financial services.

2.0

1.6

Philippines

1.2

Malaysia

0.8

Indonesia

Singapore

Vietnam

0.4

Thailand

0.0

6.0

7.0

3.0

4.0

5.0

0.0

1.0

2.0

SIZE OF BUBBLE DENOTES SIZE OF ECONOMY

-0.4

Source: Moody’s Analytics, ASEAN Statistics Yearbook 2023, Cushman & Wakefield Research

Source: Moody’s Analytics, ASEAN Statistics Yearbook 2022, Cushman & Wakefield Research

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LONG-TERM DRIVERS RISING TRADE AND INDUSTRIAL PRODUCTION

SOUTHEAST ASIA TAKES UP ABOUT 7.9% OF GLOBAL TRADE IN GOODS Southeast Asia is gaining a stronger foothold in global trade. Within SEA, Singapore still leads in market share, though Vietnam, Malaysia and Indonesia are steadily rising. While SEA continues to benefit from supply chain diversification, the region faces competition from alternative locations such as India and Mexico.

INDUSTRIAL PRODUCTION TO ACCELERATE IN MOST SEA COUNTRIES

Annual industrial production across emerging SEA is expected to accelerate over the next decade, with Vietnam leading growth given her geographical proximity to China.

Source: World Trade Organisation, Cushman & Wakefield Research

Southeast Asia Outlook 2024: Opportunity Beckons

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LONG-TERM DRIVERS MANUFACTURING WAGES REMAIN ATTRACTIVE IN SEA

COST ADVANTAGES IN SOUTHEAST ASIA AND INDIA

WAREHOUSE AND OFFICE USING EMPLOYMENT TO GROW IN MOST SEA COUNTRIES Indonesia, Vietnam and Philippines warehouse-using employment is expected to see robust growth. This bodes well for warehouse demand. Thailand’s ageing population would crimp employment growth prospects, though warehouse employment is expected to remain steady over the long term.

While there are significant cost advantages in SEA and India, compared to China, talent availability and expertise will require time to develop in emerging SEA.

Source: IMA Asia, Cushman & Wakefield Research

Note: Office-using employment consists of number of employed persons in the information & communication and financial & insurance sectors

Source: Moody’s Analytics, Cushman & Wakefield Research

Southeast Asia Outlook 2024: Opportunity Beckons

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LONG-TERM DRIVERS MAJOR INFRASTRUCTURE DEVELOPMENTS

KEY INFRASTRUCTURE DEVELOPMENTS (EXPECTED COMPLETION)

COUNTRY

IMPLICATIONS / AREAS TO WATCH

• Tuas Mega Port (Phase 1: 2027, final phase: 2040s) • Terminal 5 Changi Airport (2030)

• Higher warehouse demand in the west, particularly in Tuas, Pioneer, Boonlay and Jurong East, and east regions of Singapore

SINGAPORE

• Higher office demand within outer KL CBD and KL Fringe areas • Establish railway connection between West Coast and East Coast region • Catalyst for further development of Johor Bahru

• MRT 3 Circle Line (Phase 1: 2028, Full phase: 2030) • The East Coast Rail Link (ECRL) (2027) • Johor Bahru-Singapore Rapid Transit System (RTS) Link (2026)

MALAYSIA

• Hanoi Ring Roads 1 to 5 (Ring Road 2.5: completed, Ring Road 3 & 3.5 & 4: 2023 - 2028, Ring Road 5: Under planning) • HCMC Ring Roads 2 & 3 & 4 (Ring Road 2: completed, Ring Road 3: 2026, Ring Road 4: 2024 – 2028)

• Facilitate connectivity between HCMC and Hanoi and neighboring provinces and reduce logistics costs for business • Long Thanh International Airport is envisioned to boost Vietnam Southern to become an air transshipment hub in the Southeast Asian region

VIETNAM

• Long Thanh International Airport (Phase 1: 2026 • Extension of Noi Bai International Airport (2026)

• New Capital city of Nusantara (Phase 1: 2024, final phase: 2040s) • The extension of High-Speed Train Jakarta – Surabaya (2030s)

• Massive new developments of residential and commercial to support the NCC Nusantara • Faster growing commercialization in cities/areas where the stations will be located

INDONESIA

• Increasing the port’s capacity to support the growing demand for international ocean freight in the future. • Increasing the annual passenger handling capacity of the airport from 60 million at the current year to 150 million in the future.

• Laem Chabang Port Phase 3 development project (Phase 1: 2025, Phase 2: 2027) • Suvarnabhumi International Airport Development (Phase 4 and 5: 2030)

THAILAND

• The MRT – 7 project to further improve accessibility to Metro Manila • New Manila International Airport to complement existing NAIA (country’s premier airport) in Manila and Clark International Airport in Pampanga • To reduce travel time from NAIA and will connect seven cities, municipalities, and three business dis tricts (Makati CBD, Bonifacio Global City and Ortigas CBD), as well as key transport networks (MRT-3, LRT-2, and the Philippine National Railway lines)

• Metro Rail Transit (MRT) – 7 (2025) • New Manila International Airport (Bulacan International Airport) (2027) • Metro Manila Subway (2029)

PHILIPPINES

Southeast Asia Outlook 2024: Opportunity Beckons

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BOX ARTICLE: THAILAND’S PROPOSED KRA LAND BRIDGE

A PLAN IN THE WORKS

THAILAND

WHAT’S HAPPENING?

Chumphon Port Future: 13.8m TEUs

Thailand has announced plans for two deep-water ports in Chumphon (expected 13.8m TEU) and Ranong (19.4m TEU) provinces, which would be linked by 90km of highways, railways and pipelines. Ships carrying goods made in Northeast Asia would unload their cargoes in Chumphon which would then be whisked to the other side by trucks and trains, while vessels laden with wares from western Asia and Europe would do the same at Ranong. As a result, shipping companies can bypass the increasingly congested Straits of Malacca where a quarter of the world’s traded goods pass through. The project is expected to cost at least US$28 billion and targeted to be completed by 2040. • Potential time savings for shipping: Based on Thai authorities estimates, shipping companies can save 4 days sailing time and reduce transportation costs by 15%. • Benefits to countries such as Vietnam, Philippines, Taiwan, China, Korea, Japan due to the shorter route. • Gamechanger for Thailand: Expected to increase Thailand’s GDP to 5.5% per year and create 280,000 jobs. Thailand will become an important node in global supply chains. • Execution is key: Double-handling of containers would increase logistics complexities and costs. • Zero-Sum Game but the pie can expand: Risks to countries such as Singapore and Malaysia, as some ships are diverted. Though that said, according to OECD forecasts, maritime trade volumes are set to triple by 2050, and this could create sufficient demand for new ports. X X IMPLICATIONS

PHILIPPINES

CAMBODIA

VIETNAM

Ranong Port Future: 19.4m TEUs

Port of Singapore 2022:37.3m TEUs Future: 65m TEUs

BRUNEI

Port Klang 2022: 13m TEUs Future: 19.4 m TEUs

MALAYSIA

EXISTING ROUTE

SINGAPORE Strait of Malacca

INDONESIA

Source: Business Times, Cushman & Wakefield Research

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2024 ECONOMIC OUTLOOK MOSTLY MOVING IN THE RIGHT DIRECTION

2024 PROPERTY OUTLOOK

INDUSTRIAL REMAINS A GOOD BET

THAILAND (Bangkok)

PHILIPPINES (Manila)

VIETNAM (Ho Chi Minh City)

VIETNAM (Hanoi)

2024 OUTLOOK

SINGAPORE MALAYSIA (Kuala Lumpur)

INDONESIA (Greater Jakarta)

2024 Vs 2023

SINGAPORE MALAYSIA INDONESIA THAILAND PHILIPPINES VIETNAM

X X X X X

RENT

GDP GROWTH (%)

CBD GRADE A OFFICES

X X X X X X

CAPITAL VALUES

EXPORTS OF GOODS AND SERVICES ($)

X X X X

RENT

INFLATION (%)

RETAIL

X X X X

X X

X X X X X INDUSTRIAL

CAPITAL VALUES

POLICY RATE (%)

X X

X X X

RENT

UNEMPLOYMENT RATE (%)

X X X X X X X

X X X

CAPITAL VALUES

EXCHANGE RATE: LOCAL CURRENCY PER USD, PERIOD AVERAGE (an increase denotes a depreciating local currency)

X X X X

RESIDENTIAL (Non-Landed)

CAPITAL VALUES

Neutral

Positive development

Negative development

Source: Cushman & Wakefield Research

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MARKET STATISTICS

OFFICE (CBD GRADE A)

RETAIL (ISLANDWIDE)

PRIME LOGISTICS (ISLANDWIDE)

RESIDENTIAL (LUXURY CONDOS)

Rents Q4 2023 (SGD psf pm) 2024 Forecast

10.75

28.99*

1.81

5.68

X X X

6.5% ^

0.5%

X 9.8%***

X 3.7%

Vacancy Q4 2023 2024 Forecast

Current Inventory (million sf)

31.9

67.6^

125.0**

74,379 units

Pipeline Supply (million sf)

4.7

1.8

9.7

12,520 units

SINGAPORE MARKET SNAPSHOT

Pipeline supply over Current Inventory Ratio

15%

7.8%

16.8%

X X

Capital Value Outlook

Source: Cushman & Wakefield Research

ECONOMY

* Prime units: Retail units that enjoy strong footfalls with good frontage and accessibility ^ Q4 2023 Islandwide retail vacancy and inventory data from Urban Redevelopment Authority (URA)

• Singapore’s economic growth is set to improve to 3.0% in 2024, higher than 1.1% growth in 2023, albeit growth would be tempered by a still-high interest rates environment and global economic uncertainties. • Economic growth would be underpinned by a recovering manufacturing sector as external demand recovers and resilient demand for services given Singapore’s status as a regional business hub and tourism recovery. • Overall property demand should improve, albeit cautiously and higher supply in some markets such as the residential and office market would crimp rental prospects.

** Reflects conventional warehouses and prime logistics stock islandwide ***Vacancy Rate of Private Residential Units in Core Central Region

RECENT SIGNIFICANT DEALS

PROPERTY NAME

PROPERTY TYPE

Price (mil USD) / US $PSF

NET YIELD (%)

BUYER

SELLER

DATE

CAPITAL MARKETS ANALYSIS

402 / 1,437 psf

Shenton House

Shenton 101

Strata Owners

Office

Q4 2023

1. OFFICE: While rents remain on an uptrend and occupancy is high, deals remain challenging to transact due to negative cash on cash returns which is likely to persist. 2. RETAIL: There is emerging interest for value-add retail opportunities as tier one malls have performed strongly as consumers seek experiential retail. 3. PRIME LOGISTICS: Very tight vacancy

rates and a surge in rents in recent years have driven investor interest. Volumes remain held back by low industrial tenure in Singapore. 4. RESIDENTIAL : Recent cooling measures have dented demand for luxury condos as foreign demand pulls back. However, there could be long term capital gains as the price gap between suburban and luxury condos has been shrinking in recent years.

VisionCrest Commercial

LaSalle, Metro Holdings, TE Capital Partners

348 / 2,341 psf

Union Investment

Office

2.6%

Q4 2023

Apricot Capital, Lian Beng Group

Wilkie Edge

Keppel Capital

Office & Retail

261 / 1,684 psf

3.0%

Q4 2023

Frasers Centrepoint Trust

Changi City Point

Zhao Family

Retail

247 / 1,187 psf

4.3%

Q3 2023

Source: RCA, Cushman & Wakefield Research

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MARKET STATISTICS

OFFICE (KL CBD Grade A)

RETAIL (KL CBD Prime)

INDUSTRIAL (GREATER KL)

X 6.80

X 219.32

0.90 - 4.20

Rents Q4 2023 (MYR psf pm) 2024 Forecast

X 26.5%

15.8%

Vacancy Q4 2023 2024 Forecast

N/A

Current Inventory (million sf)

59.12

17.45

47,143 units

Pipeline Supply (million sf)

14.88

5.35

3,605 units

MARKET SNAPSHOT

Pipeline supply over Current Inventory Ratio

25%

31%

MALAYSIA: KUALA LUMPUR

Capital Value Outlook

Source: Cushman & Wakefield Research

ECONOMY

RECENT SIGNIFICANT DEALS

• Malaysia’s economic momentum is expected to steadily improve heading into 2024 to reach 4.5%-5.5%, compared to estimated 4% this year. • The penciled growth is expected to benefit from strong domestic demand and resilient services sector. • A rebound in global electronics demand would boost Malaysia manufacturing growth. Electrical and electronics industry is the largest sector in Malaysia’s manufacturing economy and contributed about 4.9% of GDP in 2022. • Overall, the office market remains resilient due to its ability to bounce back from economic challenges and adapt to changing market dynamics.

PROPERTY NAME

PROPERTY TYPE

Price (mil USD) / US $PSF

NET YIELD (%)

BUYER

SELLER

DATE

Joint Venture between PNB, Employees Provident Fund, KWAP

Osram Opto Semiconductors Kulim

427.6 / 338 psf

Osram AG

Industrial

Q4 2023

CelcomDigi Tower

Malaysian Resources Corp

96.2/ 214 psf

Sentral REIT

Office

8.0 *

Q4 2023

CAPITAL MARKETS ANALYSIS

QIA, Tan Sri Lim Siew Choon, Malton

Pavilion Bukit Jalil

Pavilion REIT

Retail

490/ 269 psf

Q1 2023

1. OFFICE: Rents are increasing contributed by the rising operating expenses and increasing demand for quality offices by occupiers amid the tight new supply. 2. INDUSTRIAL: Malaysia’s manufacturing sector is thriving, which translates to increased needs for warehousing, transportation, and other logistic services.

3. RETAIL: Prime mall rents remained remarkably stable indicates resilience and possibly renewed tenant confidence.

CapitaLand Malaysia Trust

CapitaLand Investment

240.5/ 272 psf

Queensbay Mall

Retail

7.3% Q1 2023

Source: RCA, Cushman & Wakefield Research

*Gross

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MARKET STATISTICS

RESIDENTIAL (HIGH-END, LUXURY, ULTRA-LUXURY CONDOS)

OFFICE (GRADE A&B)

RETAIL (SHOPPING CENTER)

LOGISTICS (GREATER HCMC)

143,163

114,045

X 10,191

Selling Price 16,694,216

Rents Q4 2023 (VND psf pm) 2024 Forecast

X 4.4%

10.2%

32.0%

839 units

Vacancy Q4 2023 2024 Forecast

X X

Current Inventory (million sf)

3.5

10.4

59.2

70,960 units

Pipeline Supply (million sf)

5.8

9.3

15.1

77,468 units

VIETNAM: HO CHI MINH MARKET SNAPSHOT

Pipeline supply over Current Inventory Ratio

167%

89%

25%

109%

Capital Value Outlook 2024

ECONOMY

Source: Cushman & Wakefield Research

• Vietnam has achieved GDP growth of 5.1% in 2023 and strives for 6.0 – 6.5% in 2024, with lowering interest rates while balancing between inflationary pressure and economic growth. • Vietnam continues to be a key beneficiary of an on-going China + 1 strategy, with healthy inbound investments. Foreign direct investment in Vietnam rose to USD 36.6 billion (32.1% yoy increase) in 2023 which was largely driven by investments into the manufacturing (64%) and real estate (13%) sectors. • Despite global economic headwinds, logistics & industrial sector in Greater HCMC remained attractive to investors thanks to the relocation of large manufacturers into Vietnam.

RECENT SIGNIFICANT DEALS

Price (mil USD) / US $PSF

PROPERTY NAME

PROPERTY TYPE

NET YIELD (%)

BUYER

SELLER

DATE

Land at Thu Duc City

Tam Luc Real Estate

Gamuda Land

Residential

315

Q3 2023

CAPITAL MARKETS ANALYSIS

New Binh Trung Real Estate Company Limited

Land in Thu Duc City

1. OFFICE: Grade A office rental growth is expected to slow, as tightened fiscal strategy among tenants continues and competition among landlords remains fierce. With new supply entry, competition among Grade A landlords is heightened. Some projects take the current slowdown as an opportunity to renovate and upgrade their property and be ready for the future market recovery. 2. RETAIL: The prevalence of experiential retail drives developers and retailers to enhance their retail space. Prime and/or well-managed properties continue to attract tenants’ leasing interest.

3. LOGISTICS: Slight growth. Capital focused on developing RBF & RBW for lease to utilize the benefits from large manufacturer’s relocation, amid the limited land availability. 4. RESIDENTIAL: Stable due to with global economic stagnation. Both developer and buyers remain hold-and-see and wait for approval and implementation of new land law. The average primary price of future launch projects will continue to rise due to the increasing land price upon limited land bank situation and rising development cost. Key source of housing demand are still from affordable and mid-end segment.

Keppel Land

Residential

Q3 2023

Capri by Fraser Ho Chi Minh, and Ibis Saigon South

EverLand Opportunities IX Limited

SHREIT

Hotel

33/ NA

Q2 2023

Source: RCA, Cushman & Wakefield Research

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MARKET STATISTICS

OFFICE (GRADE A&B)

RETAIL (SHOPPING CENTER)

LOGISTICS (GREATER HANOI)

RESIDENTIAL (HIGH-END, LUXURY CONDOS)

84,927

99,486

10,677

Selling Price 6,930,526 psf

Rents Q4 2023 (VND psf pm) 2024 Forecast

X X

14.6%

11.9%

29.0%

1,345 units

Vacancy Q4 2023 2024 Forecast

X X

Current Inventory (million sf)

1.1

12.9

22.6

15,825 units

VIETNAM: HANOI MARKET SNAPSHOT

Pipeline Supply (million sf)

0.1

5.7

8.7

22,207 units

Pipeline supply over Current Inventory Ratio

11.9%

44%

39%

140%

X X

Capital Value Outlook 2024

ECONOMY

• Vietnam is expected to see robust GDP growth in 2024 with strong foreign direct investment into the country. • Given the expected entries of new Grade A supply across Hanoi, tenants may capitalize on this opportunity to upgrade their office space. • Greater Hanoi’s industrial & logistics sector continued to benefit from the investment wave from large manufacturers, as a part of their supply chain diversification.

Source: Cushman & Wakefield Research

RECENT SIGNIFICANT DEALS

PROPERTY NAME

PROPERTY TYPE

Price (mil USD) / US $PSF

NET YIELD (%)

BUYER

SELLER

DATE

Binh Minh Investment and Trading Development Joint Stock Company Minh Quang Industrial Development Joint Stock Company

Retail Project at Hanoi

USD 50.2 million

Keppel Corporation

Retail

Q3 2023

CAPITAL MARKETS ANALYSIS

1. OFFICE: Stable. Most existing and prospective Grade A projects are in the Non-CBD area due to limited land bank in the CBD. The western urban area has been attracting investment interest in commercial sector. 2. RETAIL: The western urban districts are a promising area for retail, especially after the recent launching of a large-scale premium project which attracted more than 20 new brands in Vietnam. At least 2 other retail projects have also been planned in this area by 2030.

3. LOGISTICS : The main focus is still on IP land thanks to their competitive price and available land bank. Several international developers and institutional funds quickly expanding their RBF/RBW portfolio to utilize the investment wave from large manufacturers. 4. RESIDENTIAL: The average primary price is expected to continue to rise due to the lack of new apartment supply and the rise in material cost. Buyers’ cautious mindset regarding unstable market sentiment may drive the vacancy rate to increase.

Khai Toan Joint Stock Company, Boustead Singapore

USD 10.7 million

Land at Yen Phong

Industrial

Q4 2023

Land at My Thuan Industrial Zone

Dai Phong Joint Stock Company

Quanta Computer

Industrial

Q4 2023

Source: RCA, Cushman & Wakefield Research

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MARKET STATISTICS

OFFICE (GRADE A&B)

RETAIL (SHOPPING CENTER)

LOGISTICS (WAREHOUSE)

RESIDENTIAL (CONDOMINIUM)

326

Selling Price 14,889 psf

Rents Q4 2023 (THB psf pm) 2024 Forecast

22.8%

3.1%

20.34%

57.5%***

Vacancy Q4 2023 2024 Forecast

X X X X

Current Inventory (million sf)

21.8

10.6

59.98

476,118 units

Pipeline Supply (million sf)

7.5

1.4

7.5

5,315 units

THAILAND: BANGKOK MARKET SNAPSHOT

Pipeline supply over Current Inventory Ratio (%)

34.5%

13.1%

12.9%

1.1%

X X

Capital Value Outlook 2024

ECONOMY

Source: Cushman & Wakefield Research

* Grade A Shopping Mall, Department Store, and Community Mall Project in CRD areas *** Sold rate of new launched condominium

• Thailand’s growth for 2024 looks poised to exceed historical trend growth, on the back of a strong tourism recovery. • China and Thailand have mutually waived visa requirements for their citizens starting from March 2024, expected to elevate Chinese visitor levels to 75% of pre-pandemic levels, more than doubling the 2023 Chinese tourist tally of about 3.5m. • The inflation rate for the full year 2023 is now forecast at 1.4%. The unemployment rate fell to 0.99% in Q3 2023, down from 1.06% recorded in Q2.

RECENT SIGNIFICANT DEALS

PROPERTY NAME

PROPERTY TYPE

Price (mil USD) / US $PSF

NET YIELD (%)

BUYER

SELLER

DATE

NUE District R9

Proud Real Estate

Noble Development Condominium 190.7/ 210 psf

Q3 2023

CAPITAL MARKETS ANALYSIS

TIP 9 Industrial Project (D1-4, E1-4 and E6)

1. OFFICE: Moderate demand and large supply volume in the pipeline will continue to push vacancy rate higher. The new space and high vacancy will continue to exert pressure on landlords to align with corporate occupier requirements. 2. RETAIL: We expect to see a boom in Bangkok retail market revenues, although overall market growth may be cautious and will be nuanced between retail segments and locations.

3. LOGISTICS: Warehouse leasing activities continue to be robust, supported by burgeoning demand from Third-Party Logistics (3PL) Providers. 4. RESIDENTIAL: Looking head, the Bangkok condominium market is expected to continue to grow. Demand is forecast to rise from both domestic and foreign buyers.

Frasers Property TH Ind REIT

TIP Holding Company Limited

Industrial

47.3/ 62 psf

Q2 2023

Land at Wireless Road

Swire Properties, Sunny Ray Limited

Development Site

HKR International Ltd

70.9/ 520 psf

Q1 2023

Source: RCA, Cushman & Wakefield Research

Southeast Asia Outlook 2024: Opportunity Beckons

CUSHMAN & WAKEFIELD

MARKET STATISTICS

OFFICE (GRADE A&B)

RETAIL (SHOPPING CENTER)

LOGISTICS (GREATER JAKARTA)

RESIDENTIAL (LUXURY CONDOS)

Rents Q4 2023 (IDR psf pm) 2024 Forecast

Selling Price 1,125,573 psf

26,965

91,507*

7,160

X X

26.4%

21.4%^

X 14.0%

Sales Rate: 94.3%

Vacancy Q4 2023 2024 Forecast

X X

Current Inventory (million sf)

50.6^

28.6

431,992 units

INDONESIA: GREATER JAKARTA MARKET SNAPSHOT

Pipeline Supply (million sf)

1.4

1.1

4.9

39,662 units

Pipeline supply over Current Inventory Ratio (%)

2.5%

2.1%

17.2%

9.2%

X X X

Capital Value Outlook 2024

ECONOMY

Source: Cushman & Wakefield Research

• Indonesia’s economic growth is expected to reach about 5.0% in 2024, similar to 2023, albeit growth will remain tempered by global financial and economic condition. • Indonesia continues to see strong private consumption and attract healthy FDI inflows of about USD 47 billion, a 13.7% yoy increase. FDI was significantly driven by investments: base metal industry and mining attracted 25% and 10% of FDI respectively, into the energy transition space, given Indonesia’s supply of nickel, a key ingredient for electrical vehicle batteries. • Despite a 6% increase in 2023, a projected decline in the central bank rate for 2024 suggests a move toward more favorable borrowing terms, potentially boosting the property market, though the crucial political context acknowledges that changes in government policy post-election could influence the central bank’s decisions.

*Primary retail area in Jakarta for premium Ground Floor rents ^ Retail vacancy and Inventory of overall Jakarta retail market, both primary and secondary area

RECENT SIGNIFICANT DEALS

PROPERTY NAME

PROPERTY TYPE

Price (mil USD) / US $PSF

NET YIELD (%)

BUYER

SELLER

DATE

CAPITAL MARKETS ANALYSIS

Hankyu Hanshin Properties

Agung Podomoro Land TBK

Neo Soho Mall

Retail

93/ 135 psf

Q3 2023

1. OFFICE : Despite rents is expected to gradually improve, transaction will likely remain sluggish as the yield is still relatively low for typical investors. 2. RETAIL: International brands seek expansion, landlords retain tenants and explore new opportunities, while emerging retail facilities support Transit-Oriented Developments (TOD) in the trend of integrated spaces.

3. LOGISTICS: Despite the tight competition for the market, and new supply continue to enter the market, it has maintained low vacancy rate. The expectation for rental prices is to remain steady due tight competition in the market. 4. RESIDENTIAL: Government VAT incentives for ready stock houses will be one of the main driving factor for demand. Advancements in infrastructure facilities within the Greater Jakarta is anticipated to contribute to a subsequent rise in land prices.

Ascott Kuningan Jakarta

CapitaLand Investment

Serviced Residence

CapitaLand Ascott Trust

41/ NA

6.7%*

Q3 2023

Mandarin Oriental Jakarta

Astra International

Hotel

88/ NA

Q3 2023

Source: RCA, Cushman & Wakefield Research

*Forward Yield

Southeast Asia Outlook 2024: Opportunity Beckons

CUSHMAN & WAKEFIELD

MARKET STATISTICS

OFFICE (GRADE A&B)

RETAIL (SHOPPING CENTER)

LOGISTICS (METRO MANILA)

RESIDENTIAL (LUXURY CONDOS)

153.29*

111.76

232.26*

51.10*

Rents Q4 2023 (PHP psf pm) 2024 Forecast

X X X

X 15.4%

8.0%*

8.7%

X 6.0%*

Vacancy Q4 2023 2024 Forecast

Current Inventory (million sf)

102.2

100.3*

1,345.5

31,700 units

Pipeline Supply (million sf)

9.1

1.1

102.3

1,300 units

PHILIPPINES: MANILA MARKET SNAPSHOT

Pipeline supply over Current Inventory Ratio (%)

9.0%

0.03%

5.0%

2.5%

X X X X

Capital Value Outlook 2024

ECONOMY

Source: Cushman & Wakefield Research

*High-end/luxury market

• The Philippine government expects the country’s economic growth to improve in 2024 at a growth rate of 6.5% to 7.5% amidst ongoing strong El Nino and persistent geopolitical and trade tensions affecting the country’s foreign trade relations. • The country’s growth is driven by strong private consumption, the return of inflation to the expected target range of 2.0% to 4.0% and increased demand for Philippine exports as supply chain bottleneck eases. • Overall property demand is expected to improve in 2024, but office vacancy in some markets might be affected by the passing of the amendments to the legislation that will allow for companies to operate under more flexible work arrangements.

RECENT SIGNIFICANT DEALS

PROPERTY NAME

PROPERTY TYPE

Price (mil USD) / US $PSF

NET YIELD (%)

BUYER

SELLER

DATE

The Podium SM Investment Corp

Keppel Land

Mixed

285/ NA

Q2 2023

CAPITAL MARKETS ANALYSIS

1. OFFICE: With vacancies remaining high, headline rates in non-CBD areas marginally decline, while headlines rents in the CBD remained unchanged, on average. 2. RETAIL: The increased leisure activities and normalizing business operations are revitalizing the demand for retail space but with more emphasis on experiential shopping experience.

Chemical Industries of the Philippines

3. LOGISTICS: Vacancy rates in Grade A supply remained low, as major developers increased their presence in the segment. 4. RESIDENTIAL: Luxury segment unaffected by demand-side headwinds. Yields remained unchanged as rental rates further increase due to strong recovery of the leasing demand.

Chemphil

Keyland Corporation

Office

20/ NA

Q1 2023

Source: RCA, Cushman & Wakefield Research

REGIONAL BUSINESS CONTACT:

ANSHUL JAIN Head of APAC Tenant Representation and Managing Director, India & Southeast Asia anshul.jain@ap.cushwake.com DENNIS YEO Head of Investor Services and Logistics & Industrial Asia Pacific dennis.yeo@cushwake.com LINI DJAFAR Managing Director Indonesia lini.djafar@ap.cushwake.com GARETH POWELL Country Head Thailand gareth.powell@cushwake.com TRANG BUI Country Head Vietnam bui.trang@cushwake.com TIFFANY GOH Country Manager Malaysia tiffanygoh@ivpsmalaysia.com TETET CASTRO Head of Tenant Advisory Group Philippines Tetet.Castro@ap.cushwake.com SHAUN POH Head of Capital Markets Singapore shaun.poh@ap.cushwake.com

GORDON MARSDEN Head of Capital Markets Asia Pacific gordon.marsden@cushwake.com

BUSINESS:

RESEARCH & CONSULTANCY:

XIAN YANG WONG Head of Research Singapore & Southeast Asia Xianyang.wong@cushwake.com

CUC LE Head of Advisory Vietnam thucuc.le@cushwake.com

ARIEF RAHARDJO Head of Strategic Consulting Indonesia arief.rahardjo@ap.cushwake.com SARAWUT TIKHACHON Senior Market Analyst Thailand sarawut.tik@cushwake.com CLARO DG. CORDERO JR. Head of Research Philippines claro.cordero@cushwake.com

Cushman & Wakefield (NYSE: CWK) is a leading global commercial real estate services firm for property owners and occupiers with approximately 52,000 employees in nearly 400 offices and 60 countries. In 2023, the firm reported revenue of $9.5 billion across its core services of property, facilities and project management, leasing, capital markets, and valuation and other services. It also receives numerous industry and business accolades for its award-winning culture and commitment to Diversity, Equity and Inclusion (DEI), sustainability and more. For additional information, visit www.cushmanwakefield.com. ABOUT CUSHMAN & WAKEFIELD

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