Category Archives: Singapore Retail

Retail sector rents could ease in 2H

CONSOLIDATION and the closure of more department stores in several malls could lead to softer average retail rents and higher vacancy rates, according to a report by property consultancy firm Knight Frank.

A softer average retail rent, and higher store vacancy rates can be expected for the second half of 2015, along with an increment in the supply of retail space in major malls over the next four years.

Amid the current challenging retail landscape, and as major retailers continue to consolidate their operations in the market, mall owners will turn to issuing short-term leases to generate revenue while continuing to search for long-term tenants, the report added.

The retail climate is expected to see an influx of new retail space. Be it from new major projects or a rise in larger vacant units subsequent to the closure of several department stores island-wide, the promise of a surge in the supply of new retail space in 2015 has put pressure on prime retail rents island-wide by roughly 1 to 2 per cent this year, and average rents across Singapore may also fall by 3 to 5 per cent in 2015, Knight Frank said.

And as new major malls enter the retail pool, the report expects approximately 3.7 million sq ft of net lettable retail space to come onboard from 2015 to 2019, which averages some 0.7 million sq ft of new major retail space per year. The report noted that 1.1 million sq ft of net lettable retail space will be completed in 2018, of which roughly 75 per cent, or 0.8 million sq ft, is located in Outside Central Region of Singapore.

The year saw a wave of department store closures inducing larger vacant units in many malls. For example, Wisma Atria closed its Isetan store in 2015′s second quarter after 30 years, and John Little closed its Marina Square branch with further plans to close its Tiong Bahru store this year. Marks & Spencer also plans to close its Centrepoint store and Metro will close its Compass Point outlet by the second quarter of 2016, after running for 12 years.

According to Knight Frank, anchor retailers such as department stores play an important role in a mall by not only serving as “magnets” to various sections of the mall but also acting as “a good test bed for brands looking to enter the market”.

Heidi Yong, head of retail for Knight Frank, said that department stores continue to remain relevant in the retail market, and “serve as one of the key forms of anchor tenants, which help a mall provide a comprehensive trade mix, and serve as magnets to draw crowds to different parts of a mall”.

Retail rents for prime areas across Singapore also rose in the second quarter to S$32.20 per sq ft – a 0.8 per cent increase from the first quarter of the year. The report attributed the growth to “continued firm demand from retailers for the best spaces of popular malls due to limited supply”, with an added impact from retail trade re-positioning and renewals, and spaces developing through Asset Enhancement Initiatives (AEIs).

After undergoing AIEs, Marina Centre, City Hall and Bugis precinct saw prime retail rents rise 1.1 per cent to S$33.00 per sq ft from the previous quarter, while prime retail rents in the city fringe and suburban areas increased by 2.2 per cent to S$23.50 per sq ft and 2.8 per cent to S$33.10 per sq ft from the first quarter respectively. Orchard Road (central) prime retail rents fell 1 per cent from the first quarter to S$47.40 per sq ft while Orchard Road (fringe) showed no change in rents in the second quarter.

Singapore’s retail scene also introduced a number of “new-to-market brands” in the first half of 2015 as “as landlords scurry to refresh their tenant mixes”, the report added. Capitol Piazza featured a range of new luxury retailers and dining options, while Scotts Square, VivoCity, and Suntec City Mall also made changes to their tenant mix this year.

Business Times Jul 23, 2015

Funan DigitaLife Mall could be sold or redeveloped

The manager of CapitaLand Mall Trust (CMT) said on Wednesday (15 July) it may sell or redevelop Funan DigitaLife Mall (Funan Mall) in line with its policy of continually evaluating the trust’s properties.

“These options include and are not limited to a disposal or redevelopment of Funan Mall,” CapitaLand Mall Trust Management said in a filing on the Singapore Exchange (SGX).

CMT added that it has not entered into any agreement or transaction regarding Funan Mall, and that there is no certainty that it will enter into or conclude any such transactions.

CMT, Singapore’s largest shopping mall trust, said on Tuesday it will buy Bedok Mall from sponsor CapitaLand in a deal that values the mall at S$780 million.

The property trust’s other assets include Tampines Mall, Junction 8, IMM Building, Plaza Singapura and Bugis Junction.

Source : Channel NewsAsia – 16 Jul 2015

Revamped Capitol Theatre aiming to bring new brands to market

The old Capitol Theatre has just reopened, after a billion-dollar facelift. Along with a retail mall, the development will also include residences and a hotel. Owners of Capitol said they are adopting a strategy of bringing in new-to-market brands, as tenants, to complement its theatre and lifestyle offerings.

Japanese apparel retailer, 45r, is among the new names open for business at Capitol Piazza, the retail section of Capitol. Capitol’s strategy is to source new-to-market brands and concepts, or retailers which did not previously have a presence in Singapore.

The landlord said that aside from wanting to stand out from the retail scene, working with new-to-market brands also gives it flexibility in managing its floor space.

“Some of these luxurious brands – Louis Vuitton, Gucci – they need very big space,” said Capitol’s general manager Dawn Tan. Capitol has a “very intimate size” of 130,000 square feet, she said.

“If we go for these very high-end brands, then we would only end up with maybe only a few brands within the mall. This is not what we want. So we thought there is a market out there also for these new concepts to come in and that’s why we actually focused on these new to market concepts to be in Singapore.”

Capitol plans to explore synergies between the theatre and its retail arm, using old world charm and new offerings to engage consumers and attract tenants.

“Capitol mall is pretty unique,” said Masaki Nakashim, chief operating officer of 45r. “The theatre has a lot of history. They keep all the old buildings and make new ones. This is the same as our concept. So that’s why we decided to come here.”

“The theatre is a very important marketing tool for us because it allows us to continue to bring in different kinds of patrons,” added Ms Tan. “We can actually have musicals, forums like the arbitration forum, and also parties like the post-F1 party.

“The patron profile is constantly changing and it allows Capitol to be known and marketed to different people, and it brings a constant source, a new source of customers to capitol and to the brands.”

Property analyst Chestertons said the renovated Capitol could inject new life into the Civic District, especially the stretch leading up to the Funan Mall .

“With Capitol, the Piazza, the Theatre and the two components, Patina and residential coming up, it helps to revitalize that entire area on the North Bridge Road side, towards to Funan,” said managing director of Chestertons Donald Han.

“Hopefully it could be a spur for some of the individual owners, although the majority are strata-type owners, to refurbish the area. Because that’s an important node of retail, being connected directly to the City Hall MRT station.

“If you look at the current market, it does help to serve City Hall as a more premier retail, leisure, F&B destination because what the entire area offers will be Raffles City, Marina shopping centre destination, you’ve got now a little bit more upscale, uniqueness offered by Capitol.”

Capitol has obtained more than 80 per cent of leasing commitments to date – 65 per cent of which are new-to-market brands – with the remaining tenant renovations expected to be completed by September this year.

Source : Channel NewsAsia – 16 Jul 2015

CapitaLand Mall Trust to buy Bedok Mall for S$780m

CapitaLand Mall Trust (CMT), Singapore’s largest shopping mall trust, will buy Bedok Mall from sponsor CapitaLand in a deal that values the mall at S$780 million.

The 222,500 square foot Bedok Mall, which opened in December 2013, is part of an integrated retail-residential-transport development at Bedok Town Centre that includes the 583-unit condominium Bedok Residences developed by CapitaLand.

The mall’s Basement 2 is directly linked to the Bedok MRT station, while the new air-conditioned Bedok bus interchange is integrated with the mall on Level 2. Bedok Mall’s key tenants include Fairprice Finest, UNIQLO and Best Denki.

“The proposed acquisition of Bedok Mall complements CMT’s current portfolio of mainly suburban malls catering to the necessity shopping segment,” Mr Wilson Tan, CEO of CapitaLand Mall Trust Management, said in a statement.

“It will increase CMT’s asset size from S$10.2 billion as at 31 March 2015 to about S$11 billion,” he added.

CMT’s properties include Tampines Mall, Junction 8, Funan DigitaLife Mall, IMM Building, Plaza Singapura, Bugis Junction, Sembawang Shopping Centre, JCube, Clarke Quay and Raffles City Singapore, in which it has a 40 per cent interest.

CapitaLand Mall Trust Management is an indirect wholly-owned subsidiary of CapitaLand.

Source : Channel NewsAsia – 14 Jul 2015

Orchard Road retail rents scrape four-year low

When Singaporean Hidayu Mustaafa craves for retail therapy, she walks to a mall five minutes from her home in the eastern suburb of Tampines instead of bussing down to Orchard Road – the island-state’s shopping Mecca.

That is bad news for Orchard Road’s glitzy malls, which showcase brands such as Inditex’s Zara and H&M, as well as luxury names like Chanel and Prada. Increased competition from suburban malls and online retailers, combined with falling tourist numbers from China and Indonesia, have hurt spending and pushed retail rents to their lowest since 2011.

Average monthly gross rents of prime retail space on Orchard Road slipped 1 per cent in the second quarter from the previous three months to S$37.79 per square foot, according to Cushman and Wakefield.

“It is more imperative than ever that shopping malls need to innovate and refresh shopping experiences to stay ahead of the competition,” said Ms Christine Li, the real estate consultant’s research head in Singapore, adding that less established malls with little differentiation will underperform.

At least one mall has recently decided to revive its offerings. Wheelock Properties’ Scotts Square, where occupancy rates have been on a downtrend, said it would bring in names like fashion label Alexander McQueen and Belgian fine leather goods maker Delvaux.

Cushman and Wakefield’s Li expects Orchard retail rentals to fall 2.1 per cent by end-2015 from the end of June, while suburban mall rentals could prove more resilient and remain flat. “It’s a very challenging retail environment still for Orchard Road, but the bright spot is that there is no (new) supply in market (until 2018),” she said.

Source : Channel NewsAsia – 13 Jul 2015

Second commercial site at Woodlands released for sale

The Urban Redevelopment Authority (URA) on Tuesday (Jun 30) released detailed sales conditions for the second commercial site at Woodlands Square. The land parcel is available for sale under the Reserve List of the first half 2015 Government Land Sales (GLS) Programme.

The second commercial site will be in the Woodlands Regional Centre and will sustain the development momentum of the precinct as a key commercial cluster outside the city.

The area comprises of two distinctive districts and “will be transformed by the upcoming commercial developments at Woodlands Central and the mixed use business cluster in Woodlands North Coast”, said URA.

When fully developed over the next 10 to 15 years, the Woodlands Regional Centre will offer about 100,000 new jobs and have about 700,000 square metres of commercial space.

The proposed development on the sale site will have at least 60 per cent of the maximum Gross Floor Area – 47,009 sqm – dedicated for office use. Up to 8,000 sqm of GFA can be set aside for retail as well as food and beverage uses, added URA.

There will also be a pedestrian mall which will connect the existing MRT and bus interchange to Causeway Point and Woodlands Civic Centre.

The first commercial site in Woodlands Regional Centre is currently under construction.

Source : Channel NewsAsia – 30 Jun 2015

Park Mall to be redeveloped into commercial complex with office blocks

Park Mall will be redeveloped into a commercial development comprising two office blocks with an ancillary retail component, the building’s owner said on Monday (Jun 29).

This follows the sale of the office and retail complex at Penang Road near the Orchard Road shopping belt for S$411.8 million, Suntec Real Estate Investment Trust (Suntec REIT) said in a statement.

The new buyer is a joint venture company, Park Mall Investment, in which Suntec REIT has a 30 per cent stake.

The other shareholders of the joint venture are the SingHaiyi group, a property firm with interests in the US and Singapore, and a firm linked to Mr Gordon Tang, who is a non-executive director of SingHaiyi.

Park Mall, which has a large number of lifestyle and home furnishing shops, is more than 40 years old. It has a remaining land lease tenure of 53 years. Suntec REIT acquired Park Mall in 2005 for S$245.1 million.

Mr Yeo See Kiat, chief executive officer of Suntec REIT’s management company, said the divestment will allow Suntec REIT to free up capital for other investments and provide greater financial flexibility.

“The redevelopment will unlock the underlying value of the property by further enhancing the gross floor area of the site. In addition, Suntec REIT will have the ability to own part of the redeveloped property by acquiring one office block upon completion,” he added.

Source : Channel NewsAsia – 29 Jun 2015

Metro to close Sengkang outlet after 12 years

Metro will shut its Sengkang department store at Compass Point as the lease is expiring in August and will not be renewed, ending a 12-year association with the mall.

“On the exact date of closure, Metro’s management is still working on the matter,” a Metro spokesman said in response to a query from Channel NewsAsia.

He said Metro would like to continue serving residents in the Sengkang area, but added: “The opening of a new store, not just within Sengkang, depends on opportunities present and whether it is a suitable location with the right conditions.”

Following the closure of the Sengkang outlet, Metro will be left with four stores in Singapore: Centrepoint, Paragon, City Square and Woodlands.

Metro, whose main business is property development, had described the Singapore retail scene as challenging during its results briefing last month.

The latest announcement hints at Compass Point closing its doors for renovations by the end of the year.

At least three tenants that Channel NewsAsia spoke to said they would be shutting their stores as early as August, when the lease expires.

When contacted, the management of Compass Point said it continually reviews and adjusts its tenant mix, and that it will provide more details about what it will do with the space currently occupied by Metro at a later date.

Compass Point is part of Frasers Centrepoint and was opened in 2002. It is the largest shopping mall in Sengkang. Frasers Centrepoint, meanwhile, is one of the largest owners and operators of shopping malls in Singapore.

The company also has shares in 12 other malls here.

Source : Channel NewsAsia – 19 Jun 2015

OUE C-REIT to buy into One Raffles Place

OUE Commercial REIT on Wednesday (Jun 10) announced its plans to buy into One Raffles Place, in its maiden acquisition since its initial public offering in January last year.

Under the deal, OUE Commercial REIT plans to buy a stake of between 75 per cent and 83.33 per cent in OUB Centre Limited, which owns One Raffles Place. OUB is the registered owner of the property and it owns 81.54 per cent of the beneficial interest in the property.

This will give the REIT an effective interest of between 61.16 per cent and 67.95 per cent in One Raffles Place.

The agreed value for the acquisition is expected to be between S$1.28 billion and S$1.43 billion. Depending on the stake acquired, the purchase consideration is expected to be between S$1.0 billion and S$1.15 billion.

OUE C-REIT is seeking to strengthen its position within the Singapore office market. Following the deal, its assets under management is expected to increase from S$1.6 billion as at Dec 31, 2014, to S$3.4 billion.

Located in the heart of Singapore’s Central Business District, One Raffles Place is an integrated commercial development comprising two Grade-A office buildings and a recently refurbished retail mall – One Raffles Place Shopping Mall.

Source : Channel NewsAsia – 10 Jun 2015

11 units in Singapore Shopping Centre up for sale

A row of 11 strata units in Singapore Shopping Centre (SSC) along Orchard Road has been put for sale by expression of interest.

The units cover 7,061 square feet (sq ft) of shop/office space and make up close to half of the third floor in the mall.

SSC is a seven-storey commercial development with a basement carpark located at 190 Clemenceau Avenue.

In a statement on Tuesday (Jun 2), its marketing agent CBRE said the units have a guide price of S$12.7 million or about S$1,800 per square foot (psf).

CBRE’s Associate Director for Investment Properties, Sammi Lim, said: “The passing rent paid by the previous single tenant who occupied all the 11 units was S$7.20 psf, which gave an attractive gross rental yield of 4.80 per cent. Further rental yield upside can be expected by leasing out the units individually.”

The latest transaction in SSC was for a 248 sq ft shop on the third floor, which sold for S$1,858 psf in September 2013.

CBRE said the expression of interest for the property will close on Jul 14.

Source : Channel NewsAsia – 2 Jun 2015