ESR Group Limited Annual Report 2023 25 SUBSTANTIAL APAC DEVELOPMENT WORKBOOK FY2023 development activity was solid despite an environment with high interest rates, higher costs of capital and escalating construction costs. In FY2023, starts and completions totalled US$6.3 billion and US$4.2 billion respectively. ESR’s development workbook remains well-diversified, with the majority across Japan, South Korea and Australia and New Zealand. 76% of development starts were projects in data centres, Hong Kong and Australia and New Zealand, with only 2% of total Group starts in China. On development completions, 61% were mainly from Australia, Japan and South Korea, followed by 30% from Mainland China. ESR has significantly reduced the velocity of its new development activities in China in response to the prevailing market conditions. The Group intends to maintain this selected approach in land acquisitions, concentrating on strategically resilient submarkets within the Yangtze River Delta and the Greater Bay Area. With respect to the Group’s New Economy Development segment, an estimated US$8.7 billion of ESR’s work-in-progress on its books are estimated to run between end FY2023 and FY2026, ensuring a robust pipeline to sustain continuous growth in development fees. Moreover, despite higher construction costs across APAC, the yield-on-cost for ESR’s New Economy portfolio has maintained a steady rate of 6.3% while development margins remain robust, exceeding 30%. Geographically Diversified Workbook with Data Centres Growing in Relevance 26% Japan and South Korea 26% Australia/New Zealand 5% Mainland China 14% India and SEA 12% Hong Kong 13% Data Centres 3% Mainland China (balance sheet) 1% India and SEA (balance sheet) US$14.1 billion Summary of Development Projects Starts Completion Work in Progress (US$ billion) (US$ billion) (US$ billion) Japan and South Korea 0.9 1.8 3.7 Australia/New Zealand 1.6 0.8 3.7 India and SEA 0.5 0.4 2.1 Data Centres 1.5 — 1.8 Hong Kong 1.7 — 1.7 Mainland China 0.1 1.2 1.1 Total 6.3 4.2 14.1 Total GFA (million sqm) 2.6 3.2 9.7 Moorebank Logistics Park, Sydney, Australia STRATEGIC REPORTS CORPORATE GOVERNANCE FINANCIAL STATEMENTS
RkJQdWJsaXNoZXIy MTIwODcxMw==