Bookmark & Share
Some landlords continue to invest and upgrade malls according to consumers’ fast-changing tastes.
Despite the growth of online shopping, some landlords continue to invest and upgrade malls.
This comes as the growth of online shopping remains low at 6.1% of overall retail sales, according to the October retail sales data from the Department of Statistics. Moreover, savvy landlords have quickly adjusted to the disruptive environment caused by consumers’ fast-changing tastes and e-commerce, reported The Business Times.
In fact, some of the retail real estate investment trusts (Reits) are among the best performers in the market, with the 12 retail S-Reits posting an average total return of 23% during the first 11 months of 2019, showed Singapore Exchange data.
Mapletree Commercial Trust – the owner of Singapore’s biggest mall VivoCity – registered a total return of 51% in the first 11 months of 2019.
For the year ended 31 March 2019, VivoCity contributed 48% of Mapletree Commercial Trust’s revenue as it attracted 55.2 million visitors and posted a record tenant sales of $939.1 million.
Funan, which is owned by CapitaLand Mall Trust, re-opened this year following a $560 million makeover, offering lifestyle experiences within an integrated development comprising office, retail and co-living serviced residence. With cyclist allowed to ride through the mall, Funan includes the Swiss sewing machine Bernina’s flagship store, where machine rental service and themed sewing workshops are offered as well as the Nikon School, which is a workshop space for photography tutorials.
UOB-Kay Hian research head for Singapore Adrian Loh noted that e-commerce is more of a medium- to long-term threat to retail malls. “Of course, some malls are better able to fend off this threat due to their location near major transport hubs. Thus, some of the retail Reits have not seen negative rental reversions,” he said.
Cushman & Wakefield’s senior manager for retail Pay Chia Chee believe that the retail market is in a two-speed mode, in which demand and footfalls are concentrated at the top malls.
“This trend is accentuated by changing consumption trends which favour experiential retail and the convenience brought about by e-commerce. As such, landlords who are able to deliver best-in-class retail experiences and provide a variety of retail offerings will continue to look for opportunities to build or redevelop malls.”
She pointed that today’s shoppers want an entire retail experience.
“They are open to building affinity with a brand and all its associated collateral. In response, landlords are working with retailers to reinvent malls and rethink the best ways to curate creative spaces. ION Orchard is one such mall.”
And while e-commerce remains to be an overhang for physical retail, online sales’ annual average proportion to retail sales is still relatively low at about 5.6%, said Pay. As such, brick and mortar retail continue to be relevant as majority of retail sales are still made at physical stores.
With this, e-commerce retailers are seen expanding their physical footprints in malls. Love, Bonito, for instance, opened its third and biggest store with over 6,000 sq ft of space at Funan.
“The retail landscape is ever-changing, and is expected to remain fluid as retailers and landlords adjust to the latest trends,” said Pay.
Looking for a property in Singapore? Visit PropertyGuru’s Listings, Project Reviews and Guides.
Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg
Related Articles: