OUE Commercial REIT - Annual Report 2021

SINGAPORE RETAIL MARKET Overview Over the course of 2021, business confidence regarding the retail market gradually picked up. Singapore’s successful rollout of the vaccination programme, coupled with the government’s commitment to transition towards endemicity with fewer restrictions and the gradual reopening of the economy, led to restored business and consumer confidence. The path to reopening, however, remained bumpy as intermittent, temporary COVID- related measures were introduced to contain sharp rises in the spread of community cases due to new variants so as to avoid overwhelming the healthcare system. Overall, retail sales remained resilient despite the repeated recalibration of COVID-related restrictions. In 2021, the retail sales index (excluding motor vehicles) rose an encouraging 10.8% YoY, following a sharp 14.4% YoY decline in 2020. The growth was bolstered primarily by domestic consumption growth. The tourism dollar inflow following the launch of quarantine-free Vaccinated Travel Lanes (“VTLs”) since September 2021 also contributed to the growth, albeit modestly. Domestic and tourism consumption growth has helped to push total retail sales value (excluding motor vehicles) in 2021 to only about 5% below pre-COVID levels in 2019. As part of the government’s plan to live endemically with COVID-19, the relaxation of borders for international leisure travel which was implemented via the VTLs progressively lifted the tourism market in Singapore. In December 2021, Singapore received 92,788 visitors, a sharp month-on-month increase of 125.5% and the fourth consecutive monthly rise from the trough set in August 2021. Although this reflected pent-up demand for travel, tourist traffic remained low. There was a cumulative total of 329,971 visitors in 2021, representing a 88.0% decline YoY. The decline was seen across all source markets due to sweeping domestic and international travel restrictions implemented to curb foreign-import cases of COVID-19. Towards the end of 2021, as community infections declined, safe management measures were gradually relaxed. From 22 November 2021 onwards, some of the key measures relaxed include permitting a five-person limit, up from the previous two-person limit, for dining-in at food & beverage (“F&B”) establishments for fully vaccinated people, including those from different households. The group-size limit for social gatherings was also raised from a two-person to a five-person limit. Effective 1 January 2022, Singapore eased the default work-from-home (“WFH”) policy to allow 50% of employees who can WFH to return to the workplace, subject to vaccination measures. Singapore’s progressive move towards reopening the economy and the relaxation of safe management measures further lifted business and consumer confidence towards end-2021, boding well for the retail market. Retail Trends Shifts in shopping habits The COVID-19 pandemic led to shifts in shopping habits and preferences. More consumers became accustomed to purchasing goods via online platforms, following the initial shift to online purchasing to reduce physical contact. The contribution of online sales to overall retail sales (excluding motor vehicles) rose between 5% Source: JLL Research, 4Q 2021 04 Average Gross Rents of Grade A Offices 2016 2014 2015 2012 2013 (S$ psf per month) 14 13 12 11 10 9 CBD Marina Bay Raffles Place Shenton Way/Tanjong Pagar 2021 2019 2020 2017 2018 8 7 6 55 A N N U A L R E P O R T 2 0 2 1