Welcome to Keppel Land Report to Shareholders 2002

Amidst the general dismal economic climate, there are selected cities in Asia with attractive growth prospects for housing development. Strong demand for local housing is supported by sustained economic growth, rising affluence, government incentives and low interest rates.

During the year, the Company acquired several sites in four such cities: Beijing and Chengdu in China; Bangkok in Thailand; and Ho Chi Minh City in Vietnam.

In China, the two newly-acquired sites in Beijing and Chengdu together with earlier acquired sites in Shanghai will enable Keppel Land to develop and sell more than 6,000 quality homes over the next few years.

In Thailand, where there is strong demand for landed housing in Bangkok, Keppel Land’s listed subsidiary Keppel Thai Properties has acquired two adjacent plots, off Srinakarin Road in Bangkok, totalling 16- ha which will yield 360 units of detached houses. The first phase comprising 210 units will be launched before the end of 2003.

In Vietnam, Keppel Land is tapping the nascent demand for housing by affluent locals and Viet Kieus (overseas Vietnamese) who have recently been allowed to purchase and own homes in the country. It will be developing about 120 quality villas by the Saigon River waterfront in the An Phu District.

Earnings from overseas will be significant, especially from China, from 2003 onwards, and are expected to grow from 3% of total earnings in 2002 to 50% by 2005.

GROWING PROPERTY FUND MANAGEMENT

As Keppel Land divests its investment portfolio, rental income contribution will shrink. The Group will grow the property fund management business for fee-based income to help contribute to recurring earnings.

With growing interest from institutional funds in Asian real estate investments, Keppel Land is positioning for this growth opportunity. Its property fund management unit has been renamed Alpha Investment Partners and staffed with experienced professionals. It will leverage on the Group’s extensive Asian presence and network, its track record as well as good corporate governance and investor relations. Keppel Land’s first fund, the Asia No. 1 Property Fund, which is managed by a joint venture with Henderson Global Investors, is expected to have its first closing of about US$100 million. The fund will invest in mostly income-generating real estate assets in Asia.

MAJOR DEVELOPMENTS

Singapore
Residential

In January 2002, Keppel Land launched Butterworth 8 at Tanjong Katong area, which quickly sold out, following the successful launches of Amaranda Gardens and The Edgewater at the end of 2001. This paved the way for the successful monetisation of $355 million worth of receivables from the three projects in June which brought forward the cash flows from the deferred payment scheme under which the projects were sold.

Towards the close of the year, two small projects in the Mar Thoma Road area, The Callista and The Elysia, were launched. The Callista, a 87-unit apartment is 56% sold while the adjoining 40-unit The Elysia is 15% sold.

Keppel Land also sold a 31,312 sf site at Norfolk Road for $26 million, which will allow for a $6.6 million write-back from the landbank provision of 2001. The sale of this relatively small site allows the Group to focus on larger sites where there is greater value to be added.

Depending on market conditions, Keppel Land is poised to launch several residential projects this year including The Tresor at Duchess Park, The Linc at Lincoln Road, Cluny Hill bungalow plots and the remaining 660 units of Caribbean at Keppel Bay.

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