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Despite the gloomy outlook, two retail transactions totalling $630 million were recorded in Q1 2019.
Singapore saw the retail property sales index, excluding motor vehicles, drop 2.3 percent year-on-year in the first quarter of 2019, which is bigger compared to the 0.4 percent contraction registered in Q4 2018, revealed an Edmund Tie & Company (ET&Co) report.
This comes as retail sales in most segments declined in March, with food retailers, optical goods & books as well as computer and telecommunications equipment among the worst performers dropping by 4.9 to 6.4 percent year-on-year.
“Based on the recent business expectations of the services sector for the period of April to September 2019, the outlook for retail trade and food and beverage (F&B) segments are less optimistic, especially so for department stores and supermarkets industries,” said ET&Co.
It noted that while no transactions valued above $100 million were posted in Q4 2018, two retail transactions totalling $630 million were recorded in Q1 2019. This comprised the $400 million sale of Liang Court to CapitaLand and City Developments and the $230 million sale of Rivervale Mall to SC Capital Partners.
Meanwhile, island-wide net absorption plunged by over 98 percent quarter-on-quarter to just 5,000 sq ft, while net supply declined by around 78 percent quarter-on-quarter in Q1 2019.
Occupancy rate in Orchard/Scotts Road fell one percentage point to 93.9 percent as several brands closed operations in Q1 2019 amid tight competition in the F&B segment.
Net absorption in other city areas contracted by 16,000 sq ft in Q1 2019 from the previous quarter’s 102,000 sq ft.
Vacancy rates within the downtown and Singapore River areas continued to hover above double digits in Q1 2019 at 10.2 percent and 13.6 percent respectively.
The suburban areas witnessed a marginal decline in occupancy rate as net supply and demand for retail spaces within the area eased in Q1 2019.
While retail remain challenging, particularly after working hours and during weekends, malls situated “in prime locations with the right tenant mix and near transportation nodes, continued to perform relatively well”.
“This was evident with Singapore’s largest retail REIT, CapitaLand Mall Trust’s Q1 2019 results which reported 2.0 percent increase in shopper traffic, 1.2 percent rental reversions, and 0.4 percent decline of tenants’ sales psf,” it said.
Malls with diverse retail offerings and were well-connected to MRT stations, such as Bedok Mall, Junction 8 and Tampines Mall, posted higher gross revenues of between two and five percent, added ET&Co.
Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg
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