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CIMB does not expect Singapore’s retail REIT sector to witness a quick turnaround, reported Singapore Business Review.
This comes as shopper traffic moved between -2.0 percent to +3.0 percent during the first nine months of the year, while tenant sales ranged from -3.0 percent to +3.0 percent, said CIMB analyst Kar Mei Eing.
In fact, shopper traffic for CapitaLand Mall Trust, which owns the biggest number of malls within the city-state, continued to drop at -1.8 percent in the first nine months of 2018.
Frasers Centrepoint Trust (FCT), on the other hand, saw shopper traffic increase 2.2 percent over the same period, while Mapletree Commercial Trust (MCT) posted a 1.5 percent hike in shopper traffic.
For the period of January to September, most malls reported improving occupancy rates above 97 percent. Those that posted an occupancy rate of below 97 percent were mainly smaller malls such as Bedok Point, Changi City Point, Anchor Point and YewTee Point.
Despite various expansion plans from foreign fashion firms such as Forever21 and ZARA which boosted occupancy rates over the last few months, rental recovery will likely remain subdued.
“Although we expect retail rent increases to be supported by the tapering supply in the next few years (URA expects supply to taper from 1.6 million sq ft in 2018 to 0.78 million in 2019 and an average of 0.43 million per annum in 2020 and 2021), we think the recovery will be a gradual one,” said Eing.
Urban Redevelopment Authority (URA) data showed that retail rents continued its steep downtrend as it dipped 1.2 percent in Q3. The bleak rental environment comes as retailers struggle to retain customers who are increasingly turning to online platforms.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories, email romesh@propertyguru.com.sg
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