MANAGEMENT DISCUSSION & ANALYSIS | REVIEW OF OPERATIONS Chinese Mainland Office Market Outlook In Guangzhou, new supply in decentralised areas is expected to put downward pressure on office rents. In Beijing, new supply in core areas is limited. Demand should benefit from the removal of COVID-19 related measures. In Shanghai, demand is expected to be stable. Office rents in core central business districts, where supply is limited, are expected to be stable. The following chart shows the percentage of attributable gross rental income from the office properties in the Chinese Mainland, for the month ended 31st December 2022, derived from leases expiring in the periods with no committed renewals or new lettings. Tenancies accounting for approximately 25.4% of the attributable gross rental income in the month of December 2022 are due to expire in 2023, with tenancies accounting for a further 25.9% of such rental income due to expire in 2024. OFFICE LEASE EXPIRY PROFILE 50% (At 31st December 2022) 40% 30% 20% 10% 0 2023 2024 2025 and later Serviced Apartments There are 24 serviced apartments at the Mandarin Oriental in Taikoo Hui Guangzhou, 42 serviced apartments at The Temple House in Sino-Ocean Taikoo Li Chengdu and 102 serviced apartments at The Middle House Residences in HKRI Taikoo Hui Shanghai. The performance of the serviced apartments in 2022 was adversely affected by COVID-19 associated restrictions. Occupancy at the Mandarin Oriental in Guangzhou, The Temple House in Chengdu and The Middle House Residences in Shanghai was 88%, 76% and 64% respectively at 31st December 2022. Chinese Mainland Serviced Apartments Market Outlook The performance of the serviced apartments is expected to recover following the adjustments to COVID-19 restrictions in 2023. Investment Properties Under Development INDIGO Phase Two, Beijing INDIGO Phase Two is an extension of the existing INDIGO development, with a GFA of approximately four million square feet. Jointly developed with the Sino-Ocean group, INDIGO Phase Two will be an office-led mixed-use development and is planned to be completed in two phases, in 2025 and 2026. Basement works are in progress. The Group has a 35% interest in INDIGO Phase Two. 54