MANAGEMENT DISCUSSION & ANALYSIS | REVIEW OF OPERATIONS South Island Place occupants. Following the reopening of the border with the The offices were 87% let at 31st December 2022. Tenants Chinese Mainland and assuming continued improvements include KPMG, Fleet Management Limited, the in the financial markets, the demand for Grade-A office Competition Commission and SCMP. The Group has a 50% space in Hong Kong, particularly from financial institutions interest in the development. and professional services companies, should increase. Hong Kong Office Market Outlook The following chart shows the percentage of attributable The office market in Hong Kong is expected to be weak in gross rental income from the office properties in Hong 2023, reflecting increased vacancy rates, new supply and Kong, for the month ended 31st December 2022, derived economic uncertainty. Increasing competition from Central from leases expiring in the periods with no committed and Kowloon East will exert downward pressure on rents. renewals or new lettings. Tenancies accounting for A flight-to-quality is expected to benefit the Group as approximately 13.8% of the attributable gross rental prospective tenants upgrade their premises and place a income in the month of December 2022 are due to expire in higher value on sustainability and the wellbeing of 2023, with tenancies accounting for a further 16.3% of such rental income due to expire in 2024. OFFICE LEASE EXPIRY PROFILE 70% (At 31st December 2022) 60% 50% 40% 30% 20% 10% 0 2023 2024 2025 and later Retail Overview The completed retail portfolio in Hong Kong comprises an aggregate of 3.2 million square feet of space on a 100% basis. Total attributable gross rental income from our retail properties in Hong Kong was HK$2,320 million in 2022. At 31st December 2022, our retail properties in Hong Kong were valued at HK$54,518 million. Of this amount, the Group’s attributable interest was HK$45,649 million. 42