ISKANDAR MALAYSIA. Property Market Overview. May 2015. savills.com.au

ISKANDAR MALAYSIA Property Market Overview May 2015 savills.com.au

GEOGRAPHICAL COVERAGE OF IM Logistics Manufacturing (Aerospace Park, Senai Intl Airport, Airport City, Senai Free Zone) Tourism (JPO) MSC Cyberport Malaysia SENAI-SKUDAI Education & Health Services (Edu City & Afiat Healthpark) Entertainment & Recreation (LEGOLAND, Kota Iskandar, Puteri Harbour) State Administration Business & Finance SiLC and Medini Iskandar NUSAJAYA/MEDINI Manufacturing (Electronics, Petrochemicals, Oleochemicals) Oil Storage Terminals Trade & Expo City (APTEC City) Johor and Tanjung Langsat Port PASIR GUDANG / TANJUNG LANGSAT Financial, Cultural & Urban Tourism (Sultan Ibrahim Building) Danga Bay CIQ Complex, The Causeway Leisure (KOMTAR JBCC) JB CITY CENTRE Logistics Free Zone Industrial Area Regional Distribution, International Procurement Oil Storage Terminals Port of Tanjung Pelepas Source: IRDA TANJUNG PELEPAS Region Area (km 2 ) Population (million) Iskandar Malaysia 2,217 1.88 Greater KL 2,790 7.0 Dubai 3,885 2.2 Hong Kong 1,095 7.2 Singapore 690 5.5

SELECTED PROJECTS IN IM Flagship A Iskandar Waterfront Development: under planning Country Garden Danga Bay: completion in 2018 Flagship B Educity: completed in 2014 Legoland: completed in 2013 Puteri Harbour: Phase 2 completed in 2013 (other phases under construction/planning) Source: IRDA Flagship C Flagship D Flagship E Port of Tanjung Pelepas: completed in 2012 Pasir Gudang Specialist Hospital: completed in 2012 Johor Premium Outlets: completed in 2011 Pinewood Iskandar Malaysia Studios: completed in 2013 Petrochemical & Maritime Industrial Hub Tanjung Bin: completion in 2015 (phase 2) Universiti Teknologi MARA: opened in 2013 Senai Hi-Tech Park: launched in 2011 Source: Savills Research

PRESENCE OF CHINESE DEVELOPERS IN IM Developer: Zhuoda Group Project: 1 Paradiso Nuova (high-rise residential development on 16 acres) 4 2 5 Developer: Guangzhou R&F Properties 6 Project: 6 Princess Cove (116-acre development with residences, retail units and offices) 1 Developer: Country Garden Projects: 2 Country Garden Danga Bay (residential and retail units on 57 acres) 3 Forest City (integrated development on reclaimed land about 1,386 hectares) 3 Developer: Greenland Projects: 4 Jade Palace (retail and residential units on 13.6 acres) 5 Tebrau Bay Waterfront City (128-acre mixed-use development) Developer: Hao Yuan Project: not announced yet (purchased 37 acres in Danga Bay) Source: Savills Research

INVESTMENTS INTO IM IM continues to receive strong investment interest with 47% realised to date (RM78.53 billion out of RM166.11 billion). During the first quarter of 2015, IM secured RM7.98 billion in new investments, recorded a total cumulative committed investments of RM166.11 billion. Manufacturing sector continues to be the top performer, contributing 31% (RM50.82 billion), followed by supporting sectors such as residential & retail property sector at 41% (RM68.75 billion) and industrial properties, government, utilities, and emerging technologies at 6%, 5%, 8%, and 1% respectively. The other promoted sectors merely contributing 9% of the total investments into IM, such as logistics (3%), healthcare (2%), tourism (2%), education (1%), and creative & finance (1%). RM160 RM140 RM120 RM100 RM80 RM60 RM40 RM20 RM0 Total Cumulative Investments into Iskandar Malaysia [2006 Q1 2015] RM166.11 Government RM158.13 8.31 Properties 8.31 Utilities, Tourism & Others RM131.64 40.06 Manufacturing 8.31 38.58 Total Committed Investment RM105.14 RM93.89 7.31 33.25 RM69.48 6.28 35.14 61.15 66.92 RM55.56 6.28 27.30 43.26 RM41.75 6.28 21.83 28.79 6.83 16.52 19.98 RM25.80 14.45 8.17 9.11 5.80 5.05 46.82 50.09 50.82 RM11.30 7.10 21.70 23.65 26.92 31.22 33.90 5.80 11.90 5.50 2006 2007 2008 2009 2010 2011 2012 2013 2014 Mar-15 Total Investments into Iskandar Malaysia Realised RM78.53 billion (47%) Committed RM87.58 billion (53%) Source: IRDA

FOREIGN INVESTMENTS INTO IM Foreign investments stand at 38% of the total committed investment as of Q1 2015. Top 5 foreign investors are: Singapore Investments from Singapore mainly consist of education, healthcare, manufacturing and property development sectors. Investments from China are mainly from the property development sector. USA Spain Japan China RM3.74 bil Top 5 Foreign Investors China Total Investments (RM Billions) 180 160 140 120 100 80 60 40 20 34.14 50.64 Domestic vs Foreign Investments Foreign Investments Domestic Investments 37.45 67.69 44.81 83.40 56.99 63.77 101.14 102.34 Japan RM4.06 bil Spain RM4.18 bil USA RM6.30 bil Singapore RM12.06 bil 0 2011 2012 2013 2014 Q1 2015 Source: IRDA

IM INCENTIVES SUPPORT PACKAGE (ISP) APPROVED DEVELOPER Income tax exemption on income derived from disposal of land in the approved nodes (up to 2025); and Income tax exemption on income derived from sale or rental of a building in the approved nodes (up to 2030) APPROVED DEVELOPMENT MANAGER Income tax exemption on income derived from the provision of management, supervisory & marketing services to an Approved Developer company, specific to an approved project in the approved nodes (up to 2030) IDR STATUS COMPANY 10 year corporate tax exemption for qualifying activities or an Investment Tax Allowance of 100% for five (5) years Other incentives:- I. Exemption from EPU property acquisition guidelines II. III. IV. Each foreign knowledge worker employed by an ISP approved company will be eligible to import or purchase a duty free car for his or her own personal use Flexibility to recruit foreign knowledge workers subject to the guidelines of the Iskandar Malaysia Expatriate Committee (IMEC) Flexibility from foreign exchange administrative rules set forth by BNM FLAGSHIP INCENTIVES FISCAL & NON-FISCAL 5 year corporate tax exemption / Import duty & sales tax exemption / flexibility to recruit foreign workers / flexibility from foreign exchange administrative Note: 1) The ISP to be extended for another 10 years after the initial expiration on 31 Dec 2015. 2) The approved nodes are Medini, Vantage Bay, Danga Bay and Pinewood Iskandar Malaysia Studio. Source: IRDA

RECENT MARKET UPDATES February 2015 March 2015 April 2015 Iskandar Malaysia declared as a Regional Centre of Expertise for Sustainable Development (RCE) to promote sustainable future developments and to provide a platform for individuals and organizations to generate ideas. Employees Provident Fund (EPF) entered into a joint venture with Australia s Goodman Group to develop logistics assets in Klang Valley and Iskandar Malaysia with a total development value of RM1.4 billion. CapitaLand s Ascott Limited (Ascott) raised its presence in Iskandar with its 3rd property (the 214-unit Citadines Medini Nusajaya) Australian developer Walker Corporation together with an investment firm named Wang & Wong Pte Ltd will develop Senibong Hills. This development consists of landed homes and high-rise apartments together with a club house. 3 new firms to invest approximately RM600 million in Medini: Goldbury is establishing a global information technology (IT) automotive hub in Medini Brandt International will set up a BPO and knowledge process outsourcing (KPO) Vision Technology Consulting will develop a development centre that will provide Oracle technology implementation and related outsourcing services as well as enterprise mobility solutions. Traders Hotel Puteri Harbour has rebranded itself as Hotel Jen Puteri Harbour, Johor. It s the 10th hotel to adopt this new brand name UEM Sunrise Bhd unveiled its comprehensive development plans for the 2 nd phase of Gerbang Nusajaya, which consists of a 210ha integrated eco-friendly tech park ( Nusajaya Tech Park ) and a 212.4ha motorsport city ( FASTrack Iskandar ) United Malayan Land Bhd is collaborating with Thailand s Onyx Hospitality Group to open the first Amari Hotel in Malaysia. It will be part of a mixed-use development in Johor Bahru named Suasana Iskandar. Upon completion in 2017, Amari will have 242 rooms with indicative average price per room between RM1,158 and 1,552 per night

RESIDENTIAL PROPERTY MARKET As of end of 2014, the total supply of residential properties in IM stands at 429,018 units, an increase of 2.3% y-o-y. Landed properties = 274,010 units (64% of supply) Non-landed properties = 56,087 units (13%) Low cost housing = 98,921 units (23%) The total existing stock of condominiums/serviced apartments increased by 65% between 2006 (20,512 units) and 2014 (33,840 units) Residential units under construction = 106,487 residential units (37% are landed properties, 58% non-landed properties and 5% low cost housing) Residential units under planning = 141,960 units Therefore, 248,447 new units in the pipeline = 58% increase over the existing supply. 500,000 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 5.7% 96,764 35,797 217,877 Total Residential Supply in IM (2006 2014) 5.0% 97,734 39,509 3.6% 97,914 98,068 98,669 98,753 98,767 98,921 98,921 44,044 46,306 48,412 49,164 50,110 51,658 56,087 2.4% 2.3% 1.9% 1.7% 2.5% 1.1% 230,755 239,456 246,421 251,249 254,904 260,716 268,755 274,010 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 35,000 30,000 25,000 20,000 15,000 10,000 5,000 Cumulative High Rise Residential Properties in IM 6,356 3,349 2,985 2,985 2,985 2,985 2,915 2,471 909 19,603 21,372 22,731 24,665 25,205 25,205 26,129 27,313 27,484-2006 2007 2008 2009 2010 2011 2012 2013 2014 0.0% - 2006 2007 2008 2009 2010 2011 2012 2013 2014 Total Low-Cost Stock Total Landed Residential Stock Growth Rate (%) Total Non-Landed Residential Stock Serviced Apartment Condominium / Apartment Source: JPPH

NEW LAUNCHED CONDOMINIUMS IN IM The incoming supply of condominiums reached its peak in 2013, as a total of 34,949 units were launched during the year with the majority (80%) located in Johor Bahru City Centre and surrounding suburbs. As a comparison, Kuala Lumpur launched about 22,000 units of condominium units in 2013 and the number of private residential units launched in Singapore was 15,885 units only (inclusive of landed and non-landed properties) that year. 2014 was a slow year as the number of newly launched condominium units shrank by 63% from a year ago. Only 12,934 units were launched in 2014. This could be a consequence of the recent cooling measures such as the raise in Real Property Gains Tax (RPGT), minimum foreign threshold raised to RM1 million as of 1 May 2014 and the tight lending market. Causeway Regency However, any development that was approved before 1 May 2014 does not have to comply with the RM1 million threshold rule. For instance, units in Causeway Regency, launched in January 2015, can still be sold below RM1 million to foreigners. Besides, the lack of new launches could be attributed to the low take-up rates of launched projects, as developers with new stock to the market could have taken their cue from the performance of their competitors. Aliff Avenue In April 2015, we witnessed the launch of Causeway Regency (228 units) and Jade Palace (2,456 units). Jade Palace is a 13.6-acre waterfront development jointly developed by Greenland Group and IWH that consists of 13 towers of residential building (4 towers are open for booking now). Anecdotal evidence shows that Phase 1 was 80% booked. During the same period, MB Group launched their wellness development located in the Sungai Pulai Ramsar Wetland Reserve and named Sungai Pulai Wellness Resort, and offered a preview of its high-rise residential development at Tampoi named Aliff Avenue (282 units). In December 2014 was announced that all new serviced apartment applications will be frozen, but those who have received their approval prior to this announcement can continue their projects.

RECENT LAUNCHES IN IM Scheme Name Location Built-up (sq ft) Price Range (psf) No of Units Take Up Rates Aliff Avenue Tampoi 538-1,098 RM400-640 282 Preview only Princess Cove - Phase 1 Tanjung Puteri 469-1,343 RM750 - RM1,300 868 50% G Residence Plentong 653-1,552 RM450 - RM500 480 70% Citywoods JBCC 764-1,240 RM540 417 40% Acquaint Danga Danga Bay 549-4,730 RM900 - RM1,200 818 80% Centara Residences Nasa City 785-1,690 RM660 - RM732 232 20% Causeway Regency JBCC 776-1,408 RM800-980 228 n/a Jade Palace Danga Bay 488-1,047 RM850 2,456 Booking stage Seventh Cove Masai 907 4,861 RM978 RM1,149 392 Grand Medini Medini 474-1,149 RM770 - RM1,100 672 50% Citrine @ The Lakeview Medini 933-1,348 RM850 328 75% Meridin - Phase 2 Medini 318-885 RM1,000-1,100 Tower A: 583 Tower B: 322 Tower C: 322 Tower B: 100% Source: Savills Research

OFFICE PROPERTY MARKET As at end of 2014, the total private purpose-built office supply stands at 5.89 million sq ft. Refurbishment works at Menara Komtar were recently completed (total NLA is 409,000 sq ft) and is now fully occupied by Jcorp and its subsidiaries. There is no major office cluster located in IM per se, but approximately 95% of the existing offices are located within the JB City Centre with most of the buildings being old. Overall occupancy rate averages 73% across Iskandar Malaysia, with only a few well-located office building that manage to achieve higher than 85%, such as Menara MSC Cyberport, JB City Square Office Tower, Menara TJB, Menara Ansar and Menara Landmark. Menara Landmark is located within an integrated development that consists of 4 levels of medical suites as well as the Doubletree by Hilton. Rental rates for prime office space in Johor Bahru City Centre are ranging between RM2.50psf and RM3.50psf per month. Future office supply is mostly sited within master-planned developments such as Medini Business District, Medini Central, Iskandar Waterfront District, Iskandar Financial District & Sunway Iskandar Apart from the manufacturing sector, sectors that require office space such as Financial Advisory & Consulting, Education, Creative Industries, Tourism and Healthcare are encouraged to move to Iskandar Malaysia. Average Occupancy Rate 80% 75% 70% 65% 60% 55% 50% 45% Occupancy Rate of Purpose Built Office -Private Name Developer Expected Completi on Date Size (sq ft) Status Medini Lakeside UMLand 2018 683-2,120 Open for registration Markers Iskandar - Tower A Markers Iskandar Tower B Lakefront Southkey Tower A & B Selected New Launches of Office Suite in IM Ra Ta Land Sdn Bhd Ra Ta Land Sdn Bhd Southkey Properties Sdn Bhd 2017 1,500-4,300 2017 1,500-4,300 2015 A: 80,000 B: 50,000 Tower A 100% leased 140 units available n.a. 40% 2006 2007 2008 2009 2010 2011 2012 2013 2014 Citrine Office Suites Sunway Iskandar Sdn Bhd 2017 746-1,671 100% sold Source: JPPH Source: Savills Research

RETAIL PROPERTY MARKET New completions in 2014 include: KOMTAR JBCC (405,000 sq ft) Sutera Mall Entertainment City (approximately 300,000 sq ft) Mydin Pelangi Indah (21,528 sq ft) As of 2014, there is a total of 12.49 million sq ft of NLA of retail space in IM, with retail space per capita slightly over 6.33 sq ft per person (lower than Greater KL s 7.6 sq ft per person). Average prime rents in IM are ranging between RM5psf and RM20psf; however, JB City Square, located opposite the CIQ, managed to achieve as high as RM40psf. Retail growth in IM is evident asproven by the opening of Johor Premium Outlet Phase 2 (2013) and KOMTAR JBCC (2014). Moreover, AEON Tebrau City is undergoing expansion to house a multi-storey car park, a department store and a supermarket. With the population expected to grow and plans set in place in IM to boost its economy, this will support the growing retail market in the years to come. Major malls in the pipeline are listed below:- Name Developer Expected Completion Year Paradigm Mall WCT - 750,000 Net Lettable Area (sq ft) Midvalley Southkey Megamall Southkey Properties Sdn Bhd 2018 1,500,000 Tropicana Danga Bay Mall Tropicana Danga Bay - *250,000 Capital 21 Hatten Group 2017 1,000,000 Country Garden Lifestyle Mall Country Garden Danga Bay 2017 430,000 Note: (*) Tropicana Danga Bay Mall was initially announced at 1 million sq ft and it has now reduced to 250,000 sq ft. Source: Savills Research

INDUSTRIAL PROPERTY MARKET As at end of 2014, the total number of existing supply of industrial properties in Iskandar Malaysia stood at 14,159 units. Terraced factories accounted for 54%, followed by detached (21%) and semi detached factories (21%). 2014 observed a growth rate of +2.65% Y-o-Y, which is the highest since 2006. This strong growth can be attributed to the new quality industrial parks (Frontier Industrial Park, i-park@silc, Setia Business Park, SiLC, Skudai 8 Biz Hub and Indahpura Industrial Park) which were launched in 2013 and 2014. With other industrial developments coming on stream in a couple of years such as the Nusajaya Tech Park, Sime Darby s Harvest Green Industrial park and UMLand s Dover Business Park, the supply is expected to improve significantly. In addition, we expect more MNCs shifting their operations to IM, as foreign investments currently account for 38% of the total committed investments. Current Existing Supply of Industrial Properties by Type 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - Source: JPPH 2006 2007 2008 2009 2010 2011 2012 2013 2014 Terraced factory Semi-detached Detached Flatted factory Industrial complex Cluster Future Supply of Industrial Properties by Type Total number of Units 1,800 1,681 1,600 1,400 1,200 1,029 1,000 909 804 800 600 409 400 335 200 - Terraced factory Semi-detached Detached Incoming Industrial Supply Planned Industrial Supply 272 251 - - 10 23 Flatted factory Industrial complex Cluster

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