Colliers Radar Singapore Residential 16 October The Collective Sales Wave Impact on Singapore's residential market

Colliers Radar Singapore Residential 16 October 217 The Collective Sales Wave Impact on Singapore's residential market

Transaction Value (SGD million) No. of transactions Tricia Song Director and Head Research Singapore tricia.song@colliers.com We believe the current collective sales wave will rise through 218 and into 219, and prime luxury sites will gain favour soon. Historically, collective sales activity has been a leading indicator of the residential cycle. The collective sales upswing may well accelerate the price recovery in the near term due to immediate incremental demand from the displaced sellers and the large capital gains. We estimate average home prices to rise 17% over 218-221F, driven by stronger GDP growth, falling physical completions and ongoing collective sales deals. The collective sales market should play an increasingly larger role in encouraging estate rejuvenation in land-scarce Singapore. Eligible home owners should take account of the depreciation of their ageing properties and accept realistic prices. Developers should pace the landbanking and launches with pricing discipline. Executive Summary After four years of subdued activity, residential collective sales in Singapore roared back to life in late 216 with three deals worth SGD1. (USD.7) billion done. Year to date, this number has quintupled to SGD5.36 (USD3.94) billion over 14 collective sales from May-October 217. The land grab rush could be explained by the surprising pick up in developer sales from February 217 amid depleting landbanks and an increasingly positive economic prognosis. The government has also held off on Government Land Sales (GLS) offerings, and developers are turning to private en bloc or collective sales as alternative land sources. Despite the surge in activity so far, compared to the SGD21.8 (USD14.5) billion transacted in the last collective sales fever of 25-27, we are still less than a third through. We estimate the current heightened activity in the collective sales market to rise through 218, lasting into 219. Historically, collective sales activity has been a leading indicator of the residential cycle. The collective sales wave may well accelerate the price recovery in the near term with immediate incremental demand from the displaced sellers (2,836 units and counting), and the large capital gains. We expect average private home prices could rise 17% over 218-221F, in line with the GDP growth. As we move into the next 5 years of nation building, redevelopment and intensification of land use should play a larger role in housing a growing population in land-scarce Singapore. As buildings and land (of finite leasehold) age, private home owners should be increasingly aware and inclined to accept collective sales as an exit option at realistic prices. Developers should be mindful of the pace of landbanking and launches (likely to straddle 218-219), as well as the concentration of sites, with pricing discipline. Residential Collective Sales since 1994: YTD 217 14, 12, 1, 8, 6, 4, 2, 4 22 4 27 38 21 1 5 11 15 48 79 111 8 7 44 49 23 1 1 3 14 12 1 8 6 4 2 Transaction Value No. of transactions Source: Colliers International Singapore Research. YTD 217 as of 6 October 217

Contents Collective sales fever... 4 Improved developer sales and depletion of unsold inventory... 4 Positive outlook, price index rose for first time in 16 quarters... 5 Low supply via the Government Land Sales (GLS) Programme... 5 Supply completions tapering off... 12 Rising land prices could boost price expectations... 12 Relaxation of immigration policies?... 12 Conclusion... 13 Appendix... 14 Collective sales sites since 216... 14 Chronology of cooling measures... 16 How long will this last?... 6 Less than a third through... 6 Prime plots to follow... 6 Developers will be more selective... 6 What could bring a premature end to this upswing... 6 Impact on demand... 8 Number of replacement homes... 8 Amount of available capital... 8 Impact on supply... 9 Likely bumper launches in late 218-219 9 Timing and location are key... 9 Key considerations for developers... 1 New challenge for owners: Sellers' Stamp Duty (SSD)... 1 Impact on prices... 11 Collective sales activity a leading indicator of the residential market cycle... 11 Stronger GDP growth... 11 3 The Collective Sales Wave 16 October 217 Residential Colliers International

26 27 28 29 21 211 212 213 214 215 216 YTD Aug 217 No. of units Collective sales fever What is a Collective Sale? A collective sale is a sale of properties that are under multiple ownership to a single buyer. The buyer is typically a developer purchasing for redevelopment purposes. These properties tend to be old and on land that is under-developed. For strata-titled properties, such as apartments, townhouses, office blocks, malls, mixeduse developments, flatted factories, that are at least 1 years old/less than 1 years old, 8%/9% (by share value and floor area) of owners' consent is necessary before the property can be put up for sale. For landed properties with separate titles, 1% owners' consent is required. This is a uniquely Singapore phenomenon that started in 1994. It arose from density/ plot ratio rationalisation for 55 planning areas in the 55 Development Guide Plans (DGPs) that were gazetted as the new Master Plan in 1998, providing a clear guide to land owners on their land use. Is the optimism justified? The Singapore real estate collective sales market has recently picked up alongside the overall positive sentiment in the property market. In late 216, the collective sales market started to stir with three successful sales of Shunfu Ville, Rainbow Gardens and Harbour View Gardens worth a total of SGD1 (USD.7) billion. So far this year (up to 6 October), 14 residential collective sales have been transacted at a total of SGD5.36 (USD3.94) billion. This has already surpassed the total transaction value for 211, when 49 residential collective sales of SGD3.1 (USD2.5) billion was done, based on Colliers International's research. 217 is the best showing since 27 when SGD11.6 (USD7.7) billion was done. In August, 56-unit Tampines Court was sold at a whopping SGD97 (USD713) million, making it the largest collective sale in dollar quantum in 1 years after Farrer Court which went for SGD1.34 (USD.9) billion in June 27. As of 6 October, there are four projects worth at least SGD.9 (USD.7) billion which have recently launched and could close in the next few months. Another 5-6 projects are reportedly in various stages of the collective sales process. Of those successfully closed, a few were sold significantly higher than their initial guide prices -- Rio Casa (28% higher), Eunosville (17% higher) and Serangoon Ville (16% higher), Sun Rosier (15% higher) and Amber Park (18% higher). After four years of subdued market conditions and macro-economic headwinds, Singapore's private residential property market is seeing improved sentiment and increased activity. The private residential property price index for Q3 217 showed its first rebound in 16 quarters. This could signal a budding recovery which developers want to participate in. Improved developer sales and depletion of unsold inventory Developer sales languished for more than three years following the eighth round of property cooling measures in June 213. However, since February 217, developer sales have picked up significantly on improved sentiment. YTD August developer sales have risen 6% YOY to 8,391 units, already surpassing the 7,972 units sold in the full year of 216. Annual developer sales averaged 12,453 units over 26-216; YTD 217 already surpassed 216 full year's 7,972 units 25, 2, 15, 1, 5, Developer sales Annual average 26-216 Source: Colliers International Singapore Research, URA 12,453 As developers have not been actively replenishing their landbank due to the protracted downturn, the pick-up in sales means that the unsold pipeline is quickly being depleted. The pipeline supply of unsold uncompleted private homes has dwindled 62% to 15,85 units as at end Q2 217 from the recent peak of 39,184 units at end 211. Assuming the 26-216 annual average take-up of 12,453 units continues, the unsold pipeline with planning approvals will be fully depleted in 1.2 years. It is 4 The Collective Sales Wave 16 October 217 Residential Colliers International

No. of housing units 26 27 28 29 21 211 212 213 214 215 216 Jun-17 No. of units no wonder developers are now aggressively loading up on land. Pipeline supply of unsold private homes dwindled since 211 5, 4, 3, 2, 1, Unsold Completed Private Residential Units Uncompleted Private Residential Units Unsold Source: Colliers International Singapore Research, URA. Uncompleted unsold units include those with planning approvals. Positive outlook, price index rose for first time in 16 quarters 1,844 15,85 On 2 October, the Urban Redevelopment Authority's (URA) flash estimates for Q3 217 showed the first uptick for private home prices after 15 consecutive quarters of decline. The private residential property index increased.5% QOQ, compared with a.1% decline in the previous quarter. This brings YOY change to -.4%, and YTD change to +.1%. Prices are now 11.2% from the peak in Q3 213. The price stabilisation came three quarters after Singapore's real GDP growth surprised on the upside in Q4 216, when the country not only averted technical recession, it jumped 12.3% QOQ and 2.9% YOY, to bring full year 216 GDP growth to 2.%. The growth was propelled by manufacturing which grew 39.8% QOQ on a seasonally adjusted annualised basis (SAA). Q1 217 real GDP was up 2.5% YOY, while Q2 grew 2.9% YOY, driven by manufacturing, which grew 8.5% and 8.1% respectively on robust output expansions in the electronics and precision engineering sector on the back of strong global demand for semiconductors and semiconductor manufacturing equipment. Services sector rose 2.4% YOY on finance & insurance, transportation & storage, and other services (education, health & social services and the arts, entertainment & recreation), accelerating from 1.4% in Q1. Economists generally expect Singapore's economic growth to remain uneven. Manufacturing and exportdependent service sectors will probably outperform more domestic-oriented sectors. However, aided by fiscal stimulus and an accommodative monetary policy, Oxford Economics expect consumer spending and investment to improve, with GDP forecast to grow by 2.7% in 217 and 2.9% in 218, up from 1.9% in 215 and 2.% in 216. Low supply via the Government Land Sales (GLS) Programme Since 213, the declining residential market and looming oversupply prompted policymakers to cut back land supply in the half-yearly Government Land Sales (GLS) Programme. The planned residential supply via the Confirmed List in GLS was trimmed by 81% to 1,56 units in H1 216 from the peak of 8,135 units in H2 21. Developers' demand for land has been robust with 14 average bidders per government land sale (GLS) site since the second half of 216, at record bids for selected plum sites. In June 217, the government increased the supply of land for private housing in the Confirmed List by 55 units or 21.9% HOH to 2,84 for 2H17. However, this number is still deemed inadequate given the recent strong take-up. With limited GLS offerings, developers are turning to private or collective sales as alternative land sources. Government Land Sales (GLS): 2,84 units on Confirmed List (CL) in H2 217, +21.9% HOH 16, 14, 12, 1, 8, 6, 4, 2, Resi (Confirmed List) Resi (Reserve List) Note: A site on the Reserve List System will be put up for sale if a developer's indicated minimum price in his application is acceptable to the government. Source: Colliers International Singapore Research, URA 5 The Collective Sales Wave 16 October 217 Residential Colliers International

29Q1 29Q3 21Q1 21Q3 211Q1 211Q3 212Q1 212Q3 213Q1 213Q3 214Q1 214Q3 215Q1 215Q3 216Q1 216Q3 217Q1 Index Q1 29 = 1 How long will this last? Less than a third through According to Colliers International's research, a surge in collective sales transactions typically spans eight to 12 quarters. Compared to the SGD21.8 (USD14.5) billion recorded in 25-27 in the last collective sales fever, we are still less than a third through and are still seeing very strong demand for land from developers. With a gestation period of 9-12 months from the formation of a Collective Sale Committee to the legal completion of the sale, and the 5-6 potential deal pipeline at various stages, we estimate the current heightened activity in the collective sales market to rise through 218, lasting into 219. We believe a marked improvement in private home sales and the overall positive sentiment in the property market will continue to fuel developers appetite for land. Prime plots to follow The collective sale boom in 26-27 was driven by the high-end segment, and eventually spread to the massmarket segment. However, this time around, the charge is being led from the bottom. So far, out of the 17 successful collective sales since 216, only two relatively small plots - One Tree Hill and Jervois Gardens - were in prime districts 9 and 1. Going forward, we expect more prime freehold plots to come on the market as their values increase with the more aggressive land prices achieved in the mass markets. The good take-up rates at new prime district projects such as Gramercy Park and Martin Modern are leading indications and reflections of the luxury market. Developers are increasingly aware that statistics indicate a growing demand in the SGD2-3 (USD1.5-2.2) million affordability band from locals for prime districts. We envisage developers will do well with efficiently-planned smaller format layouts in prime districts. Singapore will continue to be attractive to foreign buyers and smaller quantum luxury housing will certainly drive demand from foreigners, who might have stayed on the side lines because of cooling measures, currency uncertainty, capital control or tax amnesty reasons. Singapore private home prices attractive relative to other key gateway cities As of Q2 217, Singapore home prices have declined for 15 consecutive quarters, and were 11.6% below their 213 peak. Compared to other key gateway cities that have seen home prices rise sharply over the same period, such as Hong Kong's 35.8% increase, Singapore home prices look more attractive, even with the property cooling measures in place. As of Q2 217, Singapore's private home prices have fallen 11.6% since Q3 213; compared to HK's which have risen 35.8% 35 3 25 2 15 1 5 Source: Colliers International Singapore Research, URA, Rating and Valuation Department (HK) Developers will be more selective Once developers have bought enough sites, they will start going slow on collective sales and will become more selective. Properties in well-connected locations with attractive redevelopment potential, committed sellers and a reasonable asking price will be key selection criteria for developers. A first-mover advantage could also be key as more collective sales within the same locality emerge. Developers will favour those with less competitive supply and so timing and speed to market for the sellers will be important. What could bring a premature end to this upswing Unrealistic price expectations Singapore Private Property Price index HK Private Property Price Index 38.8 136.6 Many owners fear that the upswing will only last for a short period of time hence the 8% consensus has been achieved much quicker. Owners seem more realistic in their price expectations for now but with new records of high land prices achieved, we envisage owners may raise their expectations and the potentially unrealistic 6 The Collective Sales Wave 16 October 217 Residential Colliers International

1 11 21 31 41 51 61 71 81 91 11 111 DC Rates (SGD/sq m GFA) % change HOH price chasing might lead to an early end to the ongoing collective sale upswing. Rising development charge rates In Singapore, developers pay a Development Charge (DC) to the state to enhance the use of a site. The Ministry of National Development, in consultation with the Chief Valuer, revises DC rates twice a year, on March 1 and September 1. The rates are based on the Chief Valuer's assessment of land values and take into consideration recent land sales and other property transactions. released by the government on the Confirmed List in the next few GLS programmes; 2) fresh property cooling measures should prices skyrocket; 3) an economic downturn. Development Charge (DC) rates as of September 217 for non-landed residential use have increased by an average of 13.8% compared to March 217, the highest average increase since September 27, when the average increase was 57.8%. The largest increase of 29% applies to sector 1 (Tampines Road / Hougang / Punggol / Sengkang area) which rose from SGD3,36 psm to SGD4,34 psm, after the collective sale of Rio Casa sold for SGD76 (USD519) psf per plot ratio (ppr). Sector 11 rose 28% after the collective sale of Eunosville sold for SGD99 (USD668) psf ppr. Other sectors which have seen land sales YTD also rose 2-25%. With higher asking prices and higher DC rates, developers will compete up to a certain point until the pricing economics become unsupportable. Development Charge Rates for Non-landed Residential Use as of September 217 14, 12, 1, 8, 6, 4, 2, 35% 3% 25% 2% 15% 1% 5% % DC Rates Sector % change from previous Source: Colliers International Singapore Research, MND Competition from government land sales Other factors that would curb the collective sales cycle or reduce the enthusiasm include: 1) significantly more land 7 The Collective Sales Wave 16 October 217 Residential Colliers International

Impact on demand As of 6 October 217, the 17 successful residential collective sales since 216 would have generated SGD6.37 (USD4.68) billion in proceeds for the owners of the 2,836 units. Four more sites, which could displace 444 owners, worth a potential SGD.9 (USD.7) billion could also close over the next few months. Collective sales: demand and supply implications Collective Sales Concluded since January 216 (17) Launched for sale and pending tender closing (4) No. of existing residential units 2,836 12,387 444 1,632 Total 3,28 14,19 Potential no. of new residential units from redevt* Source: Colliers International Singapore Research. Data as of 6 October 217. Please refer to Appendix for details and assumptions. Our analysis of the possible impact on the immediate demand for replacement shows that based on direct replacement demand, sales of private homes could increase by up to 2,3 units. A more aggressive outcome could materialise in the longer term assuming the generous proceeds are reploughed into the market with leverage. Based on the available capital and assuming an average outlay of SGD1.5 (USD1.1) million and a loan-to-value of 5%, the increase in demand could be up to 6,7 units. Number of replacement homes > For tenant occupiers, they will have to relocate to immediately available units. This will almost certainly improve the current vacancy in the market. As of Q2 217, 9.1% or 25,651 non-landed completed private properties are vacant. This increase in demand could provide some relief to the investors and support non-landed rents which have declined 11.5% since Q3 217. > For owner-occupiers with a single property, they will have to relocate to a replacement home. This could be a private residential unit or even a Housing & Development Board (public) resale flat. The public housing option may be palatable to some, especially if they wish to keep some of the en bloc sale proceeds for their retirement or savings. Assuming 6-7% of these owners in the 21 residential collective sale sites launched since last year (up to 6 October 217) decide to buy a replacement home in the private residential market, this could boost demand for completed private homes by 1,9 to 2,3 units, with the bulk of purchases taking place in 218. In the private housing market, these sellers could buy completed units from the developers. As at end-q2 217, there were 1,844 unsold but completed private homes on the island, according to URA data. Buyers may also pick up a private home in the resale market, which in turn could give rise to demand spilling over to the primary market. > For owner-occupiers who own one or more other residential properties in other developments, they could relocate to one of their properties and may or may not buy another unit due to the Additional Buyer's Stamp Duty (ABSD). For the same reason, investors who own one or more other residential properties may or may not purchase a replacement property. Amount of available capital Based on the total transactions worth SGD6.4 (USD4.7) billion since 216 and 2,836 existing units in the developments, the average collective sale owner bags SGD2.2 (USD1.6) million. We do not know the level of existing mortgage on each unit, but it is likely to be low as the premium or profit each unit garnered is typically 5% or more over the individual market value. Assuming 8% of the proceeds are cash, each owner has an average SGD1.8 (USD1.4) million to spend on a new home. Total available capital in the market would be SGD5.1 (USD3.8) billion. Of course, the owners may not plough back the proceeds of sales into the real estate market. In addition, as the estates are old, it is prudent to assume most of the owners are retirees or semi-retirees, and may not be able to borrow or gear up significantly to purchase new homes, given the Total Debt Servicing Ratio (TDSR) framework. However, they could help their children fund their first homes. In a blue-sky scenario, assuming an average outlay of SGD1.5 (USD1.1) million per new home and a loan-tovalue of 5%, the increase in demand could be up to 6,7 units worth SGD1.2 (USD7.4) billion. These would be equivalent to slightly over half a year's developer take-up. 8 The Collective Sales Wave 16 October 217 Residential Colliers International

216 217 (F) 218 (F) 219 (F) 22 (F) 221 (F) >221 (F) No. of units 26 27 28 29 21 211 212 213 214 215 216 YT Aug 217 No. of units Impact on supply We estimate over 14, new private homes could potentially be generated from the 17 residential collective sales that have been transacted since 216 as well as another four launched whose tenders have yet to close or be awarded. Due to the intensification of use and smaller redeveloped units, for every one unit displaced in the next one year, around four units could be launched and built four to five years down the road. Hence, although the displacements create a short-term demand, there are concerns about a build-up in supply of units that will be launched in due course from new projects on collective sale sites. Likely bumper launches in late 218-219 Launches of the new projects on these sites will straddle 218 and 219, while the physical completion will likely be four to five years after the legal completion of the collective sale, or 221-222. Private home supply pipeline has peaked in 216 and will taper off in 217-22 25, 2, 15, 1, 5, 2,83 16,544 8,417 8,465 6,65 12,434 Completed Sold Unsold Total Source: Colliers International Singapore Research, URA. Pipeline includes those without planning approvals. 873 As of June 217 URA data, 12,434 units and 873 units will be completed in 221 and after respectively. Of course, this will increase with more collective sales. Sufficient for over a year's demand We forecast developers' private home sales will increase this year to about 11,-12, units going by the 8,391 units already sold in this year to August - up from the 7,-plus units in each of the past three years. We believe a sustainable long-term annual private home sales demand should be about 12,-13, units, in line with the 26-216 annual average demand of 12,453 units. Taking into account both government land sales and private land sources, developers could progressively accumulate land for 6, - 65, units on a five-year rolling basis. As of now, the 14, units that could be generated from the collective sales so far do not seem to represent oversupply, given it could be absorbed in slightly more than a year. However, the other sources of land should not be ignored. There are 2,84 units on the H2 217 GLS Confirmed List, although up to 5,285 units could be triggered for tender on the Reserve List. Developers have also acquired en bloc or landed sites from single sellers which could be redeveloped into condominiums. Recent examples include: Sloane Court Hotel, 1 Draycott Park and land sites in River Valley and Guillemard Lanes etc. Annual developer sales averaged 12,453 units over 26-216; YTD 217 total has already surpassed 216 full year's 7,972 units 25, 2, 15, 1, 5, Developer sales Annual average 26-216 Source: Colliers International Singapore Research, URA Timing and location are key 12,453 We believe the risk of oversupply is low if the launches are paced over time and across different market segments and locations. There are also potential new growth areas envisaged and supported by government initiatives such as the Jurong Lake District and Bidadari. As of 3 June, we estimate that the prime districts 9-11 (in particular, districts 1 and 11), the east coast area and the western part of Singapore have the least uncompleted supply or about 5% of their respective existing stock. 9 The Collective Sales Wave 16 October 217 Residential Colliers International

Non-landed stock and upcoming supply as a percentage of existing completed stock Districts (units) 25-28 (North) 21-23 (West) 19-2 (North east) 17-18 (Changi) 15-16 (East Coast) 12-14 (City fringe) 9-11 (Prime) 1-8 (Downtown) 14,518 19,941 29,71 38,747 33,948 4,82 44,564 42,68 2,911 Source: Colliers International Singapore Research, URA. Data as of Q2 217. Key considerations for developers ABSD remission clawback 28% 59,972 4,265 2,12 5,33 15% 5% 16% 2,431 15% 9,881 3,291 23% 1, 2, 3, 4, 5, 6, 7, Existing stock Upcoming supply New as % of existing stock Compared to the previous collective sale wave in 25-27, developers have at least one additional concern - ABSD on the land acquisition. Since January 213, developers have been required to finish developing a new project and sell all the units within five years from the collective sale order granted by the Strata Titles Board or the High Court - as part of the conditions for upfront remission of the 15% ABSD on the land price. A number of the collective sales sold since last year involve huge sites, each of which may potentially be redeveloped to more than 1, new homes. Examples include former HUDC estates such as Tampines Court, Serangoon Ville, Eunosville, Rio Casa and Shunfu Ville. It appears that developers no longer shun large leasehold sites even with ABSD still in place. 5% 5% To extend the deadline, developers will have to fork out an additional 8%, 16% and 24% of the land purchase price for the first, second and subsequent years respectively. The amount is pro-rated according to the proportion of unsold units. Should developers fail to comply with the QC rules, their banker s guarantee of 1% of the land purchase price that they put up will be forfeited. Unsold units risk being force-sold by the government. New challenge for owners: Sellers' Stamp Duty (SSD) Some owners who are selling their properties are affected by the Seller s Stamp Duty (SSD) and face cashflow concerns as SSD payments are before completion proceeds. For owners who had bought their residential properties between 14 January 211 to 11 March 217, selling within 1/2/3/4 years of purchase will incur a 16/12/8/4% SSD. For those who had bought on and after 11 March 217, the SSD will be 12/8/4% if they sell within 1/2/3 years of purchase. The SSD must be paid within 14 days of: (1) Date of exercise of Option to Purchase (OTP or Contract; (2) Date of signing the Sales and Purchase Agreement (where OTP is not applicable); 3) Date of Transfer, if (1) and (2) above are not applicable. Please refer to the Appendix for more details on the various cooling measures. If these developers are unable to finish selling all the units within the stipulated five years, they might have to reduce the prices to clear the inventory. The Interlace and d'leedon built on large sites (the former Gillman Heights and Farrer Court respectively) sold during the 27 en bloc boom are still left with unsold units. Qualifying Certificate extension charges On top of the ABSD consideration, listed developers or developers with non-singaporean shareholders or directors are also bound by the Qualifying Certificate (QC) rules. Under the Residential Property Act, "foreign developers" must apply for QC when they buy private residential land for development. The QC conditions require them to complete their projects within five years of acquiring the site, and to sell all the units within two years of completion. If they fail to do this, they incur extension charges for the unsold units. 1 The Collective Sales Wave 16 October 217 Residential Colliers International

Transaction Value (SGD million) Residential PPI (Q1 29 = 1) Historically, total residential land sales volumes (in particular collective sales) and the private home price index move in tandem 16, 14, 12, 1, 8, 6, 4, 2, 18 16 14 12 1 8 6 4 2 Collective Sales GLS Sites Overall Residential PPI Notes: 1) Residential collective sales include sites zoned for "Residential", "Residential with Commercial at 1st storey", and "Commercial and Residential". 2) Government Land Sale (GLS) sites include sites zoned for "Residential", "Residential with Commercial at 1st storey", "Commercial and Residential", "Executive Condominium", "Design, Build and Sell Scheme (DBSS)". 3) Overall Residential PPI is based on Q3 flash estimate from URA. Source: Colliers International Singapore Research, URA, HDB, YTD 217 as at 6 October 217 Impact on prices Collective sales activity a leading indicator of the residential market cycle Historically, total residential land transaction volume has increased in tandem with the residential prices. In fact, the rising activity in collective sales we are seeing now could be a leading indicator for private home prices. The relationship between collective sales and private home prices is interdependent and to some extent, selffulfilling. Developers must be feeling confident of an impending upcycle to be bidding for land at higher land costs, and with collective sales creating immediate incremental demand and capital inflows in the market, property prices may be boosted. However, in the longer term, as we have discussed earlier, the multiplied supply will kick in a few years down the road, and the market ultimately needs to fall back on underlying fundamentals. The ability of the developers to pass on the higher land prices to the buyers will still depend on the affordability for owner-occupiers and the rental yield-to-cost of capital for investors. We assume the cooling measures would likely remain in place. Without collective sales, we believe property prices have bottomed, and should start climbing in 218, in line with GDP growth. The collective sales wave may well accelerate the price recovery due to forward pricing by the developers when they launch the new projects. We expect average private home prices to rise 5% per annum in 218 and 219 before moderating to 3% per annum in 22 and 221. This would bring the total price increase in the next four years (end-217 to 221F) to 17%. This is roughly in line with the aggregate 15% GDP growth we are likely to see from 217-221F. Stronger GDP growth Historically, Singapore private home prices have a strong correlation with Singapore GDP growth, tempered by property cooling measures. In 1993 and 1994, when GDP growth was 11.5% and 1.9% respectively, the private residential price index rose 35.8% and 42.3% respectively. During the Asian Financial Crisis, Singapore went into recession with -2.2% GDP growth in 1998, private residential prices fell 12.4% in 1997 after the antispeculative measures announced in 1996, and tumbled another 34.% in 1998. During the dotcom bust in 21, private home prices fell 11.7% and stayed more or less flat through 22-25 due to SARS and Avian flu. Subsequently, prices grew 1.2% in 26 and jumped 31.1% in 27, reflecting the global economic boom at the time, Singapore's strong population influx (population growth of 16% between 24-28) and undersupply of housing. 11 The Collective Sales Wave 16 October 217 Residential Colliers International

No. of units During the Global Financial Crisis in late 28-early 29, private home prices fell 24.9% from peak in Q2 28 to trough in Q2 29. However, on an end-of-year to end-of-year basis, prices increased by 1.7% in 29 as Q3 29 staged a strong recovery. Singapore private home prices highly correlated with GDP growth: expect 217-221F in tandem 5% 4% 3% 2% 1% % -1% -2% -3% -4% Residential Properties Price Index (YOY chg) Real GDP growth (RHS) Source: Colliers International forecasts, MTI, URA, Oxford Economics forecasts Overall private home prices have come down 11.6% over 15 quarters from Q3 213 to Q2 217, over a period where annual GDP growth was modest but stable at 1.9-2.% in 215-216, coupled with loan curbs and stringent taxes (ABSD, SSD), as well as peak supply of 18,971-2,83 annual private home completions in 214-216. Going forward, with GDP growth expectations of a stronger 2.7% in 217 and 2.9% in 218, an average 2.9% across 217-221F, and a tapering supply completion, we forecast private home prices could rise in tandem. With the property cooling measures still in place, and all else constant, we are unlikely to see volatile price swings. Supply completions tapering off 2.% 15.% 1.% 5.%.% -5.% Based on the latest data in June 217, total private home completions in 217 will be 16,544 units, down 2% from 216 s historical high of 2,83 units. 218-22 completions will fall by a further half to 8,417, 8,465 and 6,65 units respectively. Historical and future private home completions: supply to ease from peak in 216 25, 2, 15, 1, 5, Completed Uncompleted (Sold) Uncompleted (Unsold) Source: Colliers International Singapore Research, URA. Data as of Q2 217. Rising land prices could boost price expectations As developers have bid up the land costs due to stiff competition, the implied end-selling prices they must achieve to break-even or make a small margin, have exceeded the current market value, in some cases by 1-2%. This situation could point to higher prices for the new launches. Developers could pass on the higher land costs to the end-buyers by offering smaller efficient sizes. This would keep the absolute price quantum affordable. Alternatively, they could aim to offer a superior product. Relaxation of immigration policies? Between 25 and 29, Singapore's population grew 19.7% to 4.99 million. This is an average annual growth of 3.7%, adding.82 million population in five years. The bulk of the growth came from a looser immigration policy, as the number of non-residents or foreigners grew 66.4% over this period to 1.25 million. This has also contributed to the significant home price escalation with the sharp increase in housing demand, without a corresponding increase in ready housing supply. Since 211, the government has tightened the immigration policy, placing more investments into various infrastructure, including public transport and housing, and focused on raising productivity. Population growth has since slowed to 1.2-1.3% average annual growth between 214-216. Data released on 27 September showed that as of June 217, population growth slowed to.1% YOY, as foreigner population registered its first decline in 14 years, falling 1.6% YOY. 12 The Collective Sales Wave 16 October 217 Residential Colliers International

In the longer term, we believe a population growth slowdown coupled with a rapidly ageing local population could pose a challenge to Singapore's economy. Hence there is some optimism that the government may be more inclined to consider relaxing immigration policies, now that more infrastructure is in place, to accommodate a bigger population. This will help support demand for new homes that will be generated from a redevelopment of collective sale sites. Singapore private home prices highly correlated with population growth 5% 4% 3% 2% 1% % -1% -2% -3% -4% Residential Properties Price Index (YOY chg) Population growth (RHS) 6.% 5.% 4.% 3.% 2.% 1.%.% -1.% sold. There is a strong race to collecting 8% of signatures to effect a collective sale launch, and we will definitely see a huge collision of great opportunities for developers in the next few quarters. Some weaker sites will unfortunately be unsold and the key to success is honest realistic pricing. For developers, collective sales will remain an important source of land, complementing the government land sales. With the myriad of new rules that have kicked in since the last cycle, developers should be mindful of the pace and timing of landbanking and take into account any contingency costs (such as potential clawback of the 15% ABSD remission, QC extension charges, higher development charges etc) when bidding for land. The timing of future launches as well as pricing discipline will be crucial to ensure a strong and sustainable market. Source: Colliers International Singapore Research, DOS, URA. Population growth figures have been adjusted to show year-end to year-end growth. Conclusion As we move into the next 5 years of nation building, redevelopment and intensification of land use should play a larger role in housing a growing population in land-scarce Singapore. Private home owners should view collective sales as an option to exit older properties (at a premium) which could be inviable or too costly to refurbish, and for the land to be put to more efficient use. In particular, for ageing properties with 99-year leasehold tenure, land and building may have depreciated significantly to a point where they may not be able to find individual buyers on the market. They would be increasingly aware and inclined to accept collective sales at realistic prices. In the current collective sale upswing, we have noted the coming together of different owners with one united collective sale endeavour. Past collective sales have been somewhat divisive but this time round, we see greater unity and alignment among owners. They have greater trust and faith in one another and are more willing to give and take. This perhaps underpins the early success of the collective sale sites which have been 13 The Collective Sales Wave 16 October 217 Residential Colliers International

Appendix Collective sales sites since 216 NAME OF PROJECT TYPE OF DEVELOPMENT TENURE SITE AREA (SQ FT) MAX. ALLOWABLE AREA (SQ FT) ASKING PRICE (SGD MILLION) LAND COST (SGD PER SQ FT PER PLOT RATIO) TENDER CLOSING DATE PLANNING REGION POTENTIAL NO. OF DISPLACED UNITS POTENTIAL NO. OF UNITS Villa D'Este Private Freehold 55,48 49, 96. 1,73 on land area Aug 217 CCR 12 24 Dunearn Court Private Freehold 19,23 26,884 38.8 1,443 Sep 217 RCR 12 35 Florence Regency Former HUDC 13 yrs wef 1/12/1985 389,236 1,89,861 6. 779 Sep 217 OCR 336 1,2 Changi Garden Private Freehold 2,93 28,13 196. 7 Oct 217 OCR 84 373 Total 664,12 1,445,875 93.8 444 1,632 Notes: 1) Under Master Plan 214, Villa D'Este is zoned Residential within Good Class Bungalow Area (GCBA). 2) CCR, RCR and OCR refers to Core Central Region, Rest of Central Region and Outside Central Region. Source: Various sources, Colliers International Singapore Research. Updated as of 6 October 217 14 The Collective Sales Wave 16 October 217 Residential Colliers International

17 RESIDENTIAL COLLECTIVE SALE SITES SOLD SINCE 216, 14 SOLD IN 217-TO-DATE NAME OF PROJECT TYPE OF DEVELOPMENT TENURE SITE AREA (SQ FT) MAX. ALLOWABLE AREA (SQ FT) TRANSACTED PRICE (SGD MILLION) LAND COST (SGD PER SQ FT PER PLOT RATIO) TRANSACTED DATE PLANNING REGION NO. OF DISPLACED UNITS POTENTIAL NO. OF UNITS Shunfu Ville Former HUDC 99 yrs wef 1/5/1986 48,927 1,144,996 638. 747 May 216 RCR 358 1,526 Harbour View Gardens Private Freehold 3,745 43,43 33.25 772 Aug 216 RCR 14 57 Raintree Gardens Former HUDC 99 yrs wef 1/4/1987 21,45 563,935 334.2 797 Oct 216 RCR 175 751 One Tree Hill Garden (landed) Private Freehold 39,63 N.M. 65. 1,664 on land area May 217 CCR 13 N.M. Rio Casa Former HUDC 14 yrs wef 1/2/86 396,231 1,19,447 575. 76 May 217 OCR 286 1,48 Goh & Goh Building Private Freehold 3,874 92,622 11.5 1,291 May 217 RCR 14 1 Eunosville Former HUDC 12 yrs wef 1/2/86 376,713 1,54,798 765.8 99 Jul 217 OCR 33 1,46 The Albracca Private Freehold 23,4 49,14 69.1 1,49 Jul 217 RCR 11 65 Serangoon Ville Former HUDC 1 yrs wef 1/3/86 296,91 831,348 499. 854 Jul 217 OCR 244 1,18 Toho Green Private 99 yrs wef 4/5/1978 14,136 19,79 8.4 N.A. Aug 217 OCR 6 26 Tampines Court Former HUDC 11 years wef 1/12/85 72,164 1,966,59 97. 676 Aug 217 OCR 56 2,621 Seraya Crescent Townhouse Private Freehold 24,69 33,697 25.7 931 Sept 217 OCR 6 44 Sun Rosier Private Freehold 146,46 24,464 271. 1,325 Sept 217 OCR 78 272 Jervois Gardens Nanak Mansions Private Freehold 34,38 47,653 72. 1,511 Sept 217 CCR 17 63 Private Freehold 19,629 153,481 21.8 1,429 Sept 217 RCR 36 24 Amber Park Private Freehold 213,67 598,276 96.7 1,515 Oct 217 RCR 2 797 Normanton Park Private 99 yrs wef 1/11/1977 667,368 1,41,473 83.1 969 Oct 217 RCR 488 1,868 Total 3,715,388 9,314,23 6,365.3 2,836 12,387 Notes: 1) Under Master Plan 214, One Tree Hill Gardens and Goh & Goh Building are zoned as "Residential- two-storey semi-detached" and "Residential with Commercial at 1st storey, respectively. 2) Above-mentioned sites were sold, subject to Strata Titles Board approval. 3) CCR, RCR and OCR refers to Core Central Region, Rest of Central Region and Outside Central Region. 4) Average number of units based on average unit size of 75 sq ft Source: Colliers International Singapore Research. Updated as of 6 October 217. 15 The Collective Sales Wave 16 October 217 Residential Colliers International

Private Residential Property Index (Q1 29 = 1) Chronology of cooling measures Snapshot of the eight rounds of property cooling measures since September 29 16 15 14 13 12 11 1 9 1 2 3 4 5 6 7 8 1st Easing 1 14-Sep-9 Interest absorption scheme (deferment of instalments until TOP) and interest-only housing loans (interest payment only until TOP) were scrapped for all private properties 2 2-Feb-1 a. Introduction of Seller's Stamp Duty (SSD) for residential property and land sold within one year of purchase. b. Loan-to-value (LTV) lowered to 8% from 9% on all housing loans except HDB loans 3 3-Aug-1 a. Holding period for imposition of SSD increased to three years from one. b. Minimum cash payments raised to 1% from 5% for buyers with one or more outstanding housing loans. c. LTV lowered to 7% from 8% for second properties. d. Concurrent ownership of public and private housing within Minimum Occupation Period (MOP) is barred 4 14-Jan-11 a. Holding period for imposition of SSD increased to four years from three. b. SSD rates raised to 16%, 12%, 8% and 4% of consideration. c. LTV lowered to 6% from 7% for second property. d. LTV for non-individual residential purchasers capped at 5%. 5 8-Dec-11 a. Additional Buyer's Stamp Duty (ABSD) introduced: -Foreigners and non-individuals pay 1%, PRs buying second and subsequent property pay 3%, Singaporeans buying third and subsequent property pay 3%. 2. Developers granted ABSD remission provided full sale of development within five years of land acquisition. 6 6-Oct-12 a. Mortgage tenures capped at a maximum of 35 years. b. For loans longer than 3 years or for loans that extend beyond retirement age of 65 years: LTV lowered to 6% for first mortgage and to 4% for second and subsequent mortgages. c. LTV for non-individuals lowered to 4% 7 12-Jan-13 ABSD increased: Citizens pay 7/1% on second/third purchase (from /3%); Permanent Residents (PR) pay 5/1% for first/second purchase (from /3%); foreigners and non-individuals now pay 15%. 2. LTV for second/third loan now 5/4% from 6%; non-individuals' LTV now 2% (from 4%). 3. Mortgage Servicing Ratio (MSR) for HDB loans now capped at 35% of gross monthly income (from 4%); MSR for loans from financial institutions capped at 3%. 4. PRs no longer allowed to rent out entire HDB flat. 8 29-Jun-13 Introduction of Total Debt Servicing Ratio (TDSR): Financial institutions are required to consider borrowers' other outgoing debt obligations when granting property loans. His total monthly repayments of his debt obligations should not exceed 6% of his gross monthly income. 1st Easing 11-Mar-17 a. Seller Stamp Duty (SSD) reduced by 4% for each tier. With this change, SSD will only apply to properties sold within 3 years of purchase, down from 4 years previously. b. TDSR will not apply to mortgage equity withdrawal loans with Loan-to-Value (LTV) ratio equal or below 5%. c. Introduced Additional Conveyance Duties (ACD) for Property Holding Equity (PHE). ACD plugs a loophole which exempted companies from paying ABSD and BSD in the past. A PHE is a company whose primary (i.e., > 5%) tangible assets are Singapore residential properties. Source: Colliers International Singapore Research, Monetary Authority of Singapore (MAS), Urban Redevelopment Authority (URA), Housing Development Board (HDB) 16 The Collective Sales Wave 16 October 217 Residential Colliers International

396 offices in 68 countries $2.6 billion in annual revenue 2 billion square feet under management 15, professionals and staff Primary Authors: Tricia Song Director Research Singapore +65 6531 8536 Tricia.Song @colliers.com Contributors: Tang Wei Leng Managing Director Singapore WeiLeng.Tang @colliers.com Pearl Lok Senior Manager Research Singapore +62 6531 8624 Pearl.Lok@colliers.com Colliers International Group Inc. (NASDAQ and TSX: CIGI) is an industry leading global real estate services company with more than 15, skilled professionals operating in 68 countries. With an enterprising culture and significant employee ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include strategic advice and execution for property sales, leasing and finance; global corporate solutions; property, facility and project management; workplace solutions; appraisal, valuation and tax consulting; customied research; and thought leadership consulting. Colliers professionals think differently, share great ideas and offer thoughtful and innovative advice that help clients accelerate their success. Colliers has been ranked among the top 1 outsourcing firms by the International Association of Outsourcing Professionals Global Outsourcing for 11 consecutive years, more than any other real estate services firm. For the latest news from Colliers International in Asia, visit www.colliers.com/asia, or follow us at www.linkedin.com/company/colliers-international-asia, twitter.com/colliersasia, http://www.youtube.com/colliersintlasia Copyright 217 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.