Tag Archives: Retail Space

Three parties shortlisted for Jurong Point

Macquarie, Blackstone and Frasers Centrepoint have been shortlisted for the purchase of Guthrie and Lee Kim Tah’s space in Jurong Point mall.

The Business Times understands that Macquarie and Blackstone have each offered about S$2.2 billion – crossing S$3,350 per square foot (psf) on the 658,000 square foot commercial net lettable area owned by the equal joint-venture between Lee Kim Tah Holdings and Guthrie GTS in Jurong Point. The net yield is about 4 per cent.

Frasers Centrepoint’s offer is said to be below S$2 billion. The trio are now doing due diligence on the asset before they finalise their bids.

The three are said to be among nine parties that made submissions during an expressions of interest (EOI) exercise that closed on Nov 18.

Singapore’s biggest suburban shopping centre, Jurong Point, is connected seamlessly to the Boon Lay MRT Station and Bus Interchange.

The asset was put on the market in the fourth quarter of 2016 with a price tag exceeding S$2 billion, translating to more than S$3,000 psf.

Macquarie, Blackstone and Frasers Centrepoint all declined to comment when contacted by BT, as did Array Realty, the sole marketing agent for Jurong Point, and JLL, with whom Array worked exclusively to conduct the EOI exercise.

Other bidders who are understood to have participated in the EOI exercise include Link Reit of Hong Kong, PGIM (formerly Pramerica Investment Management) as well as some of Singapore’s big mall owners.

Private equity giant Blackstone is familiar with the Singapore property market.

Last year, it acquired a 75 per cent interest in three Singapore properties at 896 Dunearn Road, 315 Alexandra Road (next to Ikea) and 10 Jalan Kilang (off Jalan Bukit Merah) from Sime Darby; the deal valued the properties at around S$300 million. Blackstone also owns 21 Anderson Road, a 10-storey building of 34 units.

Blackstone’s Tactical Opportunities Fund was a partner in City Developments Ltd’s (CDL) S$1.5 billion profit participation securities exercise in 2014 to invest in the cashflows of CDL’s Quayside Collection asset on Sentosa Cove.

Macquarie does not own any real estate in Singapore, but has a presence elsewhere in Asia, including a big China retail portfolio.

Frasers Centrepoint Ltd group – including its sponsored shopping centre Reit, Frasers Centrepoint Trust – owns 12 malls on the island with more than two million sq ft net lettable area.

Guthrie and Lee Kim Tah are divesting a total net lettable area (NLA) of 702,000 sq ft – including 44,000 sq ft of space under the government’s Community/Sports Facilities Scheme (CSFS), which is being used by occupiers such as NTUC First Campus Co-operative’s My First Skool and voluntary welfare organisations.

There is a further space of about 59,000 sq ft under three strata retail units divested by Lee Kim Tah and Guthrie about two decades ago to Golden Village, NTUC FairPrice and POSB – taking the total net lettable area in Jurong Point to 761,000 sq ft.

The mall is nearly fully let.

Guthrie and Lee Kim Tah are offering their 702,000 sq ft in the mall through the sale of shares in companies that own this space.

BT reported earlier that the partners, having owned the property for many years, were keen to pursue new interests and opportunities. Lee Kim Tah was delisted in early 2015 and Guthrie in November 2013.

Jurong Point draws an average monthly visitorship of six million and has a catchment of 150,000 households within a five-kilometre radius, with potential for growth as the new town planned in Tengah is progressively developed.

Major tenants for the space at Jurong Point owned by Guthrie and Lee Kim Tah include FairPrice Xtra, Courts, Harvey Norman, BHG, Uniqlo and Kiddy Palace, in addition to three foodcourts.

Jurong Point stands on two sites; one has a balance lease term of about 76 years and the other, 88.5 years. Their combined land area is 557,288 sq ft.

The original Jurong Point was completed in 1995 and spans four levels of retail space (Basement 1 to Level 3). The CSFS space is on Levels 4, 5 and 6. The extension, which was completed in 2008, has three retail floors – Basement 1 and Levels 1 and 3.

About 1,000 carpark lots in Jurong Point are available for use by shoppers.

The mall’s total gross floor area (GFA) is 1.07 million sq ft; there is no unutilised GFA, but potential buyers would no doubt be looking at the possibility of raising the mall’s income by increasing the retail area and subdividing some of the anchor tenant spaces into smaller units to extract higher per square foot rentals.

Retail property investment sales surge in Q4

The total value of big-ticket retail properties that have changed hands so far this quarter has surged to S$731.3 million, up 22.4 per cent from S$597.4 million in the preceding quarter and more than double the S$320.3 million in Q4 last year.

This tally as at Dec 8, compiled by Savills Singapore, was based on deals of at least S$10 million originating from the private sector.

Perennial Real Estate Holdings and Singapore Press Holdings’ S$265.5 million acquisition of an additional 60 per cent stake in a partnership holding Chinatown Point mall and four strata office units above it has been the biggest deal so far this quarter.

Also boosting the Q4 number was Master Contract Services’ S$250 million acquisition of the lower three levels of the four-storey Heartland Mall-Kovan and two strata retail units in Havelock II near Chinatown from a fund managed by Alpha Investment Partners.

Cityvibe, near Clementi MRT Station, also changed hands recently for S$71 million.

Despite the strong investment sales numbers for retail property since October, Savills said the year to date figure of S$1.837 billion is just 3.3 per cent higher than the S$1.778 billion for last year. This was due to the lower numbers in the second and third quarters of this year against their respective year-ago periods.

Market watchers are keenly awaiting a major retail property transaction in the first quarter of next year: Jurong Point. Singapore’s biggest suburban mall, with a price tag of over S$2 billion or more than S$3,000 psf on commercial net lettable area, is understood to have garnered strong interest during an expressions of interest exercise that closed on Nov 18.

Commenting on 2016′s performance, Savills Singapore’s managing director and head of investment and residential services, Steven Ming, said: “Investors, because they are faced with a limited supply of investible assets, are progressively willing to accept lower and lower yields. In Q3 2015, the appraised net yield for prime Orchard Road retail malls used to be 3.9 per cent; by Q3 2016, this had fallen to 3.6 per cent.

“The same trend is expected for suburban malls and HDB retail properties.”

Savills brokered the recent sale of the three levels of Heartland Mall-Kovan and the two units at Havelock II. It also brokered Alpha’s S$151 million sales of four HDB shop units in Ang Mo Kio, Bukit Merah Central, Clementi and Toa Payoh to Lian Beng Group; the deal was entered into in Q3 and completed last month.

Colliers International managing director of Asia capital markets and investment services Terence Tang noted that retail property in Singapore offers higher yields than offices, residential property and hotels. “Industrial properties offer higher yields but investing in land leased by JTC is highly regulated,” he noted.

Mr Tang also observed that rentals in suburban malls are more resilient as these malls cater to the daily needs of the masses living in the neighbourhood.

Mr Ming said that investors in the Singapore retail property segment have thus far not been entirely perturbed by the headwinds facing retailers here. “Even if tenants are facing a litany of issues including higher labour costs and online competition, well-located shops are still reporting low vacancies.

“There is ready demand from potential tenants if rents are tweaked to reflect market conditions. Investors therefore have relatively certain cash flow, which helps them to manage their loan repayment risks,” said Mr Ming.

Savills Singapore research head Alan Cheong acknowledged that passing yields for retail malls are higher than those for the office, hotel and residential sectors; moreover, residential property investors are saddled with the additional buyer’s stamp duty and seller’s stamp duty.

“The disadvantages of retail real estate is that it requires greater amount of asset management in keeping the malls or space well positioned to remain relevant to tenants and patrons. Therefore the degree of care in managing a mall is much greater than for the other real estate asset classes.”

90% of retail space at upcoming Bukit Panjang mall taken up

Retail space is filling up at Bukit Panjang’s upcoming shopping centre called Hillion Mall, announced Sim Lian Group on Friday (Nov 25).

It said in a press release that 90 percent of the approximately 174,730 sq ft of lettable area has been taken up by about 100 retail as well as food and beverage (F&B) tenants.

There are five anchor tenants – NTUC FairPrice, PCF Sparkletots Preschool, Amore Fitness and Boutique Spa, Kopitiam and Best Denki.

The mall along Petir Road, which is slated to open in the first quarter of 2017, is part of Bukit Panjang’s upcoming integrated transport hub. The Land Transport Authority (LTA) had announced that the hub will seamlessly connect the existing Bukit Panjang LRT station and the future Bukit Panjang MRT station with retail, F&B and residential developments at the same site.

Basement 2 of Hillion Mall will be directly linked to the MRT station via an underpass, said Sim Lian Group.

Above the mall is the 546-unit Hillion Residences. It is expected to receive its Temporary Occupation Permit (TOP) by September 2018.

This is Sim Lian Group’s first mixed-use development in Singapore. When complete, the mall will serve more than 220,000 residents and 760,000 commuters, it said.

Source: Channel NewsAsia – 25 Nov 2016

Toys “R” Us plans to open 2 more stores in Singapore

Unfazed by the sluggish local retail conditions, Toys “R” Us is expanding its foothold in Singapore, with plans to unveil two more stores in the coming months.

One will be slated for opening before Christmas and another by early-2017, country manager Raymond Burt told Channel NewsAsia on Wednesday (Nov 2) at the launch of its newly-refurbished flagship store at VivoCity. That will bring the number of stores the American toy retailer has in Singapore to 11.

With the new stores, there will be around 60 positions to be filled, including full-time and part-time sales positions, as well as management-level posts, added Mr Burt who oversees Toys “R” Us operations in Singapore and Brunei.

However, he declined to reveal further details about the location and size of the new stores, as well as the amount which Toys “R” Us is investing. Channel NewsAsia understands that the VivoCity store, which is 30,000 square feet, will remain the retailer’s biggest store in Singapore.

According to APAC president Andre Javes, the company, which first ventured into Singapore in 1984, has “no issues” in putting in further investments in the local market despite a deteriorating retail outlook and growing concerns over the economy.

“We will continue to grow here as we still see Singapore as a growth market,” Mr Javes, who is usually based in Hong Kong, said. “We don’t want to make decisions just based on the current economic situation which is tough… but this market has been a good one for the past 32 years and we have no issues investing more.”

In fact, Mr Javes said he is “quite optimistic” about sales over the coming years, citing the release of new Hollywood blockbuster movies that will likely add additional push in toy sales.

In addition, the toy market is usually “recession-proof” with demand for certain categories such as educational toys holding up, especially during festive seasons like Christmas, he added.

STAYING IN THE GAME

In its home market, the conventional retail chain has come under pressure from other retailers, such as Wal-Mart, that sell toys, as well as the rise of online platforms including Amazon. A sign of its struggles, Toys “R” Us shuttered its iconic 110,000 square feet flagship store at Times Square in New York last year.

In Singapore where e-commerce has rapidly taken off and given other retailers a run for their money, Mr Burt told Channel NewsAsia that Toys “R” Us has seen less of an impact thus far. Nonetheless, it is stepping up its game by rejuvenating its store experiences with interactive setups and attention-grabbing displays.

Its stores at VivoCity and Paragon have an interactive wall which allows customers to browse through product catalogues or take a photo with. At the revamped VivoCity store, an experiential area comes with three digital screens showing videos about the latest toys. The LEGO section, which is the largest across all Toys “R” Us stores in Southeast Asia, has multiple tables for children to play around.

Meanwhile, it also has an e-shopping platform and offers delivery services for online purchases.

“While we haven’t noticed much (impact), it’s something that has made us challenge our own model… we have to evolve to this new environment,” Mr Burt said. “Over the years, we have stepped up on the activities for interaction in our stores so this is one of our key recipes to success in this omni-channel world. Meanwhile, (online) is part of our business, rather than a new competitor.”

Beyond Singapore, Mr Javes told Channel NewsAsia that there is no slowing down in expansion plans either, with China, Australia and Japan as the company’s key focus.

“In the Greater China region and Southeast Asia, we will be opening around 43 stores this year and we will continue on this path in 2017,” he said.

But Toys “R” Us is taking on a different strategy in this part of the world. Instead of sprawling stores, the trick to success in Asia lies more in the store’s location given the differences in consumer activities.

“In our traditional Western markets, we usually have standalone stores that are double the size of this one in VivoCity where people can drive to on the weekends. But in Asia, we are looking at smaller stores at more convenient locations such as malls where people usually visit on the weekends,” Mr Javes said.

Source : Channel NewsAsia – 2 Nov 2016

John Little to close its last outlet by end December

Department store John Little will close its last remaining outlet at Plaza Singapura by the end of December this year, the Robinsons Group announced in a statement on Saturday (Nov 5).

The decision was made after evaluating the relevancy and sustainability of its brick-and-mortar business, said the Robinsons Group, adding that John Little will instead evolve as a brand into a pop-up format, which it will unveil next year.

“This closure is part of the consolidation efforts to focus on businesses that are growing within the Robinsons Group, while rechannelling our resources to bring in new brands and shopping concepts to excite the retail industry,” the group said.

Affected staff members have been briefed and they will be deployed to “other suitable businesses” within the organisation, it added.

The group, which is owned by the Dubai-headquartered Al-Futtaim Group, also manages Robinsons and Marks and Spencer.

Source : Channel NewsAsia – 5 Nov 2016

FCT buys Yishun 10 cinema complex retail units for S$37.7m

SHOPPING-MALL owner Frasers Centrepoint Trust (FCT) has inked deals to buy all 10 strata-titled retail units at the Yishun 10 cinema complex from Bonvests Holdings for S$37.75 million, the trust said in a Singapore Exchange (SGX) filing on Friday evening.

The trust manager’s chief executive officer, Chew Tuan Chiong, said in a statement Yishun 10 was next to FCT’s Northpoint shopping centre and acquiring its retail podium was in line with the trust’s strategy for Northpoint.

FCT added that an independent aggregate valuation of the 10 retail units done by Jones Lang LaSalle Property Consultants was S$40 million as at Sept 30, 2016. The tenure of the retail units was 99 years starting from April 1, 1990, it noted.

Both FCT and Bonvests are listed on SGX’s mainboard.

Site where iconic Queenstown cinema once stood sold for S$78m

A PRIME commercial-zoned piece of vacant land – where the former Queenstown cinema and bowling centre once stood – has been sold for S$78 million. The price for the site, which has a balance lease term of 57 years, is understood to work out to about S$756 per square foot of potential gross floor area.

Located a stone’s throw from Queenstown MRT Station, the site is at the corner of Commonwealth Avenue and Margaret Drive; it comprises two lots of land adding up to 32,305 sq ft, net of some land to be set aside for road widening.

A unit of Crescendas Group, headed by Lawrence Leow, is selling the property to a company controlled by property developer and investor Cheong Sim Lam, a member of the family that developed International Plaza in Anson Road in the 1970s.

Crescendas was previously granted written permission to redevelop the site into a seven-storey commercial building with basement car parking lots; Urban Redevelopment Authority had stipulated a maximum gross floor area of 103,112 sq ft, of which up to 40 per cent could be for retail use.

That approval has since lapsed and the new owner will have to make a fresh application for the site’s redevelopment. Under the Urban Redevelompment Authority’s Master Plan 2014, the site is zoned for commercial use.

The Housing & Development Board granted a 99-year lease for the site starting Jan 1, 1975. Crescendas is understood to have bought the property in 2006 and in 2013 pulled down what was by then described as the dilapidated former Queenstown cinema and bowling alley.

Built in 1977 and shut in 1999, the iconic light blue and white building was once popular with dating couples, families and students from nearby schools.

Queues would form at the 1,715-seat cinema as movie-goers lined up for tickets. In addition to the 18-lane bowling centre, there were also fast-food restaurants and karaoke lounges in the building.

The property was demolished three years ago as it was purported to be structurally unstable, according to an earlier article in The Straits Times.

Today, the Queenstown Public Library – which opened 46 years ago and was granted conservation status in 2013- still stands near the site.

But the area is also undergoing a rejuvenation – with new private condos coming up including Commonwealth Towers and Queens Peak (the latter is being launched later this week) as well as new public housing developments (SkyOasis @ Dawson and SkyResidence @ Dawson). Cushman & Wakefield brokered the sale through private treaty.

Based on the land price of around S$756 per square foot per plot ratio, a new commercial development on the site could breakeven at about S$1,800-1,900 psf, say market watchers. The buyer, Mr Cheong, has been in the news in recent years for his property investments in the Central Business District. He bought two adjacent office buildings at 137 and 139 Cecil Street around 2009 but sold them in 2015 and 2014 respectively.

Along Marine Parade Central, he is developing a four-storey commercial building named IMall, on the former Republic Theatre site.

Vacancy rate for retail space islandwide rises to 8.4% at end-Q3

DATA released by the Urban Redevelopment Authority (URA) shows that its retail property rental index fell 1.5 per cent in the third quarter of this year over the preceding quarter – a smaller decline compared with the 3.9 per cent quarter-on-quarter drop in Q2 2016.

URA’s retail property price index eased 0.6 per cent q-o-q in Q3 2016, after sliding 3.1 per cent in Q2 2016.

The islandwide vacancy rate of retail space rose to 8.4 per cent as at end-Q3 2016 from 7.8 per cent as at end-Q2 2016.

The amount of occupied retail space shrank 26,000 square metres (net) in the third quarter, contrasting with an increase of 1,000 sq m in the previous quarter. The stock of retail space increased by 17,000 sq m (net) in the third quarter, after rising 29,000 sq m in the previous quarter.

There was a total supply of 652,000 sq m gross floor area of retail space from projects in the pipeline as at end-Q3 2016.

Reinventing Orchard Road amid the subdued retail climate

ONE has to concede that Orchard Road is not the shopping belt it once was during its halcyon days. No longer do you see throngs lining the 2.2-kilometre boulevard, not even on weekends. Once regarded as the shopping and entertainment destination for Singaporeans and tourists alike, are Orchard Road’s glory days dwindling?

To better understand the wane of such a key shopping destination, it is worth looking at what has changed in the retail environment over the past few years.

Primarily, consumer purchasing patterns have changed. There is an increasing dependence on the convenience that e-commerce offers, and a rise in the popularity of suburban malls. The Great Singapore Sale, once a much lauded event, has lost its appeal due to thrifty shoppers seeking out favourable promotions online.

From a tourism point of view, there is now a higher focus on budget and culture travelling; shopping is no longer a focal point. Coupled with international brands having a higher global penetration (their brands are readily available back home and potentially cheaper), Singapore’s appeal as a key tourism destination for shopping seems to have waned.

 

 

However, all is not lost. Orchard Road still possesses many factors which makes it desirable. The strip is lined by iconic shopping malls, hotels and medical centres. These malls and hotels are home to a spectrum of fashion brands – from high street to luxury, and signature homegrown and international restaurants.

While it faces keen competition from Marina Bay Sands, Orchard Road still has the magnetic appeal for new market entrants to set up shop and generate brand awareness in South-east Asia. It is also worth remembering that it remains the longest retail strip in Singapore, which is a point of differentiation in terms of consumer experience.

There have been several initiatives introduced in an attempt to reinvent Orchard Road. These include the annual Fashion Steps Out, the monthly Pedestrian Night, and Rev-Up@Orchard to coincide with the Formula 1 Grand Prix, to name a few. Developers have also introduced redevelopment and asset enhancement works at buildings such as 268 Orchard Road and Centrepoint, as a means of reinventing the strip.

A more collaborative approach by the various stakeholders on Orchard Road is perhaps needed to regain its lustre.

Tourist destination

The fastest way for Orchard Road to raise its game as a tourist destination may be to consider increasing tourist-friendly initiatives that cater to the needs of not only leisure shoppers, but also transient ones.

Very often, tourists have a few hours to spare between their hotel check-out and flight. If facilities such as centralised baggage storage and direct buses to the airport are made available, Orchard Road could be the choice destination to fill up the last day of their travel.

In addition, mall landlords can also offer centralised concierge services for shoppers to have a shopping-bag-free experience, with their purchases collected on the way to the airport, prior to boarding the buses. From the local shoppers’ point of view, the concierge services can also include home delivery services.

Product differentiation

We need to remind ourselves that local shoppers remain the consistent pool of consumers. A rebranding and repositioning exercise is necessary for Orchard Road to appeal to local shoppers again.

In the current retail climate, the recipe for success for malls tends to be product differentiation and unique shopper experience. Mall landlords can leverage the pool of budding local designers by integrating them seamlessly with the existing premium brands in the malls. Instead of constantly looking outwards for new brands, landlords can also now look within and play a part in nurturing these designers, who can potentially be the next wave of household names.

Leveraging the wide tree-lined pedestrian boulevard, landlords can consider introducing more pop-up stores outdoors instead of containing them within the mall, with the aim of merely filling up empty spaces. These store formats will help create awareness for the brands and allow shoppers to be more familiar with them. This can also be a good way to attract overseas brands that want to test the level of brand acceptance in the Singapore market, without making a long-term commitment.

Place-making

Adapting to the evolving market sentiments and the needs of consumers is critical to the success of these shopping belts. Increasingly, there is a demand for a differentiated retail experience. It is now a necessity for shopping locations to have an overarching place-making strategy which includes activities planning and community engagement. This takes into account events and spaces which cater to the target demographic of both locals and tourists, encompassing both daytime and night-time activities.

Through active place-making, shoppers can expect events to be brought into the strip to create a more holistic shopping and recreational experience. For instance, on days when major sporting events are held, outdoor screenings of these happenings can take place in the open areas along Orchard Road.

In the past, marketing events such as Coca-Cola Happiness Creator Machine and the MediaCorp Subaru Car Challenge have successfully created some hype. Apart from centralised efforts by the Orchard Road Business Association (ORBA), more can be done by involving existing retailers operating along Orchard Road. For example, music festivals such as H&M Loves Music Festival can be held, combining people’s love for music with fashion.

Integrating offline and online retailing

While retailers on Orchard Road have been pampered with guaranteed footfall in the past decade, it is now time for them to step out of their comfort zones and be more proactive. There is always a limit to how far brick-and-mortar retailers can engage in price wars, and fighting head-on with online retailers by aggressively cutting prices is definitely detrimental to their business in the long run. What these retailers should do is work around the barrier that e-commerce has – the unique social interaction between the brand and the consumer.

While brands have increasingly gone online, we have also seen online retailers going in the opposite direction by setting up new-format physical retail stores. Such stores exist often not with the aim of producing sales numbers, but to act as a platform to bridge the offline and online retail experience.

For example, Zalora has had a pop-up tour in some malls to showcase its products to offline shoppers. Stylenanda, which has gained popularity over the years as one of the best Korean fashion websites together with its sister brand 3 Concept Eyes, has started setting up stores in the high streets of the main retail areas in Korea, Hong Kong, China and Thailand.

In the years to come, experiential retail will be the next wave of change we expect for the retail environment. Lines between offline and online retail will be blurred, and brick-and-mortar shops will double up as an avenue where shoppers can touch, feel and experiment with the latest products – sometimes even before the products are launched officially.

We will see technology increasingly integrated into traditional retail to offer shoppers a unique and interactive shopping experience. Some examples include augmented reality shopping catalogues and product descriptions, 3D scanning of body sizes, and virtual changing rooms. Being Singapore’s key shopping belt, Orchard Road landlords and retailers can spearhead this trend, and at the same time rebrand the whole shopping experience of the district.

Tech and sporting features headline Funan mall revamp

The upcoming Funan integrated development will include a Golden Village cinema, indoor climbing gym as well as a click-and-collect shopping experience, announced developers CapitaLand at the site’s groundbreaking on Wednesday (Sep 7).

The redeveloped Funan DigitaLife Mall, which is expected to be completed in 2019, will retain its digital roots by selling IT products. Additionally, the mall will incorporate the tech experience throughout the whole development, CapitaLand said.

The retail component, consisting a net floor area of 324,000 square feet, will be divided into three broad themes: Tech, Fit and Taste.

Under the tech cluster, Golden Village will operate a cinema with the latest in cinematic experiences while Kopitiam will operate a high-tech food court featuring tray and crockery return robots.

As part of the offline-to-online shopping experience, Funan will offer a drive-through click-and-collect shopping service where shoppers may pick up purchases at Funan’s concierge. They can also have their purchases delivered to the home.

Sports will play a big part in the new look Funan as there will be an indoor 50-lane climbing facility. Other sports facilities like basketball courts and futsal courts will also be incorporated, while it is looking to become Singapore’s first commercial building to allow cycling throughout the building.

Mr Lim Ming Yan, President and Group CEO of CapitaLand, said: “We are entering an exciting phase of real estate development driven by technology breakthroughs that are altering the fabric of our lives and the coming of age of a whole generation of consumers who grew up with the Internet. Funan is our response to these trends.”

Source : Channel NewsAsia – 7 Sep 2016