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Despite the Generation Z’s preference for online shopping, things might turn around for Singapore’s retail property owners if the government pushes through with its plan to convert several of the central business district’s older office buildings into hotels and homes.
Singapore’s malls showed some resilience to the global decline of physical retail caused by online shopping, reported Bloomberg.
The smartphone generation’s demographics, however, are still against them.
Suburban middle-class shopping centres looked to be strong in CapitaLand Mall Trust’s quarterly earnings released on Tuesday.
However, CapitaLand Mall’s tenants saw sales decline 0.9 percent year-on-year in the first half, extending a 0.4 percent drop from January to March.
The real estate investment trust (Reit), on the other hand, posted a four percent-plus increase in rents on around 150,000 sq ft of the roughly 800,000 sq ft retail space where old leases were renewed, or new ones signed in the first six months.
Surprisingly, the malls which saw the most rise in rents are located in the industrial western side, namely the IMM Building, Lot One Shoppers’ Mall and Westgate.
The landlord’s more popular properties in Clarke Quay, Orchard Road and Bugis could not even deliver a one percent increase over rents agreed upon in previous leases, which were commonly signed three years ago.
The report noted that retail attractions catering to public housing estates are holding up nicely, while those that are frequented by Singapore’s business visitors, tourists and the well-heeled are languishing.
This could be partly due to the Generation Z’s preference for online shopping. Referring to those born after 2000, buyers from Generation Z find it tedious to go and buy at remote shopping centres, when better prices could be had online.
Besides, sellers in the digital economy often do not need glamorous storefronts.
Things might, however, turn around for Singapore’s retail property owners if the government pushes through with its plan to convert several of the central business district’s older office buildings into hotels and homes.
Whether the footfall will be enough to overcome Generation Z’s retreat from physical stores is unknown. This makes it highly imperative for landlords to keep suburban malls busy.
Victor Kang, Digital Content Specialist at PropertyGuru, wrote this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg
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