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After experiencing moderate recovery in 2019, the URA Retail Price Index fell 3.1% in the first quarter of 2020, while the Rental Index declined 2.3%.
Island-wide occupancy levels also dropped 0.5 percentage points to 92% in Q1 2020.
In 2019, the Retail Price Index and the Rental Index climbed 1.3% and 2.9%, respectively.
With government rolling out circuit breaker measures to curb the spread of Covid-19, Knight Frank does not expect the retail real estate indicators for the rest of 2020 to be positive.
However, it sees opportunities for Singapore retailers post Covid-19.
“Consumer attitudes and behaviours will change as we recover from the COVID-19 outbreak. We can expect social distancing measures to remain in place. Retailers who regain the trust of their shoppers while satisfying their shopping experience will gain an edge,” it said in a report.
“Retailers who provide a safe shopping environment, while enabling optimised shopping productivity will be preferred over those who overlook these considerations.”
It noted that businesses struggling prior to the pandemic will have to “adopt technology and offer online shopping channels, or risk being obsolete”.
This comes as movement restrictions and social distancing become the new norm.
As such, retailers who have deployed digital platforms will continue to enjoy significant benefits in the long run.
“Leveraging on analytics tools and big data will enable businesses to gain valuable insights on their customers,” such as their spending habits and preferences.
Geo-location data and analytics will also help business owners strategise their business outlets as they target locations “where their customers are most saturated, optimising cost-efficiency and improving market share”.
Despite the growing popularity of e-commerce, online retail sales remain less than 10% of 2019’s overall retail volume and into the first quarter of 2020, noted the report.
Latest data from the Department of Statistics showed that total retail sales volume for March 2020 stood at around $3.3 billion, with online retail sales accounting for just 8.5% or around $282 million.
“Given that online retail sales currently comprises of only a marginal percentage of overall retail sales, there is potential for scalability nationwide, especially for sole brick-and-mortar retailers to adopt online sales avenues in a retail arena that is still predominantly reliant on physical shops,” added Knight Frank.
Once the city-state has come out of the Covid-19 pandemic, retailers who have incorporated digital sales platform will have access to a greater pool of customers that were forcibly initiated into online retail during the circuit breaker period.
And with the proliferation of e-commerce expected to continue, the property consultancy expects landlords to be amenable to shorter lease terms and flexible rent structures to attract stronger tenants.
“A hybrid rent structure comprising of a low base rent with a higher percentage of sales component will be key in curating a desired trade mix that can draw footfall traffic to the mall,” it said.
“The relationship between landlord and tenant will transform to become one akin to a partnership, as the landlord will be successful only if the tenant does well.”
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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg