Singapore malls have a good state of repair as their visitation remains a regular activity
Strong demand drivers
Singapore malls seem to have a strong demand.
Singapore’s hot and humid weather is what drives many people to air-conditioned shopping malls. Some people hide in malls during rainy weather, especially if they are connected to MRT station, bus interchanges and office buildings by covered walkways.
Due to the relatively compact size of houses and good public transportation here, people tend to meet up with family and close friends in malls.
People visit malls not only for necessities, but also for discretionary purchases, dining, enrichment activities, wellness classes and working out in gyms.
It is possible to boost mall spending by focusing on upskilling people, strengthening social safety nets and increasing the income of low-wage workers. Particularly, lower-income individuals may be more inclined to spend money on a marginal basis than high-income earners.
Budget 2024, which includes the Community Development Council Voucher of S$600 per household in Singapore and other goodies, could boost retail sales.
Owners of malls will benefit as a result of the increase in international visitors, along with massive investments to improve Singapore’s tourism offering. Mall owners will benefit from the increasing number of international visitors who visit Singapore to attend sporting events, conventions or concerts.
Singapore Tourism Board says that by 2024, it is expected to welcome between 15 and 16 million international tourists, bringing in S$26-S$27.5 billion. In 2023 there were 13.6m tourists.
STB expects the tourism sector to continue recovering, driven by increased global flight connectivity and capacity as well as reciprocal 30-day Visa exemption between Singaporean and Chinese.
STB data shows that international arrivals in January rose by 15.9% compared to the previous month, reaching 1.4m – the highest post Covid figures yet.
Both the planning regime as well as the ownership structure play a crucial role in the positive outlook for malls. Strict guidelines govern what can be constructed in each land parcel islandwide. So, there may not be a direct competitor for a mall that is a focal point in a particular area and no excess of retail space.
Some of the largest malls are owned by large, financially-strong companies such as listed real estate Investment Trusts (Reits) and property groups.
Strong mall owners invest heavily in the enhancement of assets, branding and marketing as well as property management. This ensures that their malls deliver a compelling shopping experience.
These landlords actively control the tenant mix to satisfy customer demands. At malls in high demand, the tenant mix changes constantly as popular trade categories and brands take over more space.
A few years ago, many gloomy reports were published about the potential demise of malls due to the rise of online shopping.
Malls suffered a lot from the Covid-19 epidemic and its movement restrictions. There was a heated debate over the impact of the Covid-19 pandemic on consumer behavior.
The mall owners who are here seem to be doing quite well.
Cuscaden Peak Investments reported that The Woodleigh Mall has achieved 100% occupancy. The mall is geared towards millennial families and young children.
One Holland Village, an outdoor mall with pet-friendly concept, was recently opened by a joint venture between Far East Organization and Holland Village.
CapitaLand Integrated Commercial Trust 0% : C38U (CICT) will have a rent reversion between 8.3 % and 8.8 % for both its downtown and suburban malls in Singapore, respectively, by 2023.
The manager at CICT has reported an improvement in the tenants’ sales in 2023 for all trade categories, with shoes and handbags leading the way. The value of the retail portfolio at end-2023 was up by 2,9 percent compared to the previous year.
Suntec City’s rent reversion in 2023 was 21.8 percent, as shopper and tenant traffic increased from 8 to 4% per year.
Paragon Reit SK6U 0% reported complete occupancy for Paragon Orchard Road, and The Clementi Mall by end-2023.
Frasers Centrepoint Trust, J69U, 0% has suburban malls like Century Square and Causeway Point. Waterway Point & White Sands are also near or at full occupancy.
Nike opened its largest store outside China along Orchard Road this year. The store has 3 floors and 28,000 square feet.
According to the Urban Redevelopment Authority, the prices and rents of retail spaces in Singapore’s central area rose from year to year in 2023. These increases reversed the declines that occurred in 2022.
At the end of the 2023 fiscal year, the retail vacancy rate in Ontario fell to 6.5% from 7.15% the previous year.
Various groups are working together on large-scale retail plans.
Hotel Properties Limited is proposing a mixed use redevelopment project of the Forum The Shopping Mall in Orchard Road, the HPL House on Orchard Road, and the Voco Orchard Singapore Hotel. The H15 0% plan includes offices and hotel rooms as well homes and about 288,583 sq. ft. of retail space.
Technology
Although technology can be used as a tool to attract shoppers to malls online, it is to the advantage of strong retail landlords.
The tracking of consumer spending and traffic can help to improve the tenant mix. The analysis of data about the different spending habits contributes to marketing targeted at a specific audience, which yields better results.
Shoppers who purchase online but pick up their items at the mall can use their time for other activities.
The use of technology also helps malls manage costs. This is important in times of high inflation. Mall owners can benefit indirectly if retailers are able to use technology in order to improve productivity or mitigate the challenges of manpower.
But retail landlords must be alert to the fact that consumers are fickle. They will also know that online shopping platforms compete for more of their wallets.
Locals might also have to tighten their belts because of the rising cost and increase in the tax on goods and services, or they may shop more abroad.
A growing older population means that owners will need to do more to make the malls attractive to this demographic.
However, since malls remain a staple of the American lifestyle, those who invest in innovative ideas, are creative and manage their properties efficiently can prosper.
