Professional Documents
Culture Documents
RECALIBRATING RETAIL
JM Tan | Senior Analyst
This report has been updated as of 28 August 2018 and supersedes all previous versions.
H1 2018 2018F 2018-2022F
Summary/ Half-Year Full Year Annual Average
105
Soft rental market, with some stabilisation in ground-
floor rents
Index (2011=100)
95
The retail rental market generally remained soft in H1 2018. Based on Urban
Redevelopment Authority’s (URA) data, overall Central Region rents fell by
1.7% YOY in H1 2018, chalking up a long-running decline over the past 13
quarters. However, these rental declines have slowed in the past two years. Central Region (overall)
85
According to Colliers International's research tracking ground-floor rents, Regional Centres (ground-floor)
Orchard Road ground-floor rents stayed flat YOY at SGD40.39 (USD29.59) Orchard Road (ground-floor)
psf pm during H1 2018, while the Regional Centres saw a marginal uptick
(+0.3% YOY) to SGD33.50 (USD24.54) psf pm. This marked some stabilisation
75
in ground-floor rents.
2011 2012 2013 2014 2015 2016 2017 2018 H1
We expect ground-floor rents to lead the gradual recovery, but overall retail
rents should continue flattening out and stabilise over 2018-2022 as sector Source: Colliers International Singapore Research, URA
headwinds precipitated by e-commerce have not materially subsided.
Singapore Retail | Net Supply, Absorption & Vacancy Improving occupancy as landlords concede lower
Million sq ft Vacancy rents in favour of filling up malls
2.5 12%
10%
Island-wide retail vacancy decreased by 0.2ppt QOQ to 7.3% in Q2 2018. On
2.0
a YOY basis, vacancy has fallen by 0.8ppt since Q2 2017. The fall in retail
8% vacancy combined with a sustained rental decline is evidence of the sector’s
1.5
6%
re-balancing act as retail landlords trade off historically high rents for more
1.0 stable occupancy amidst challenging market conditions.
4%
0.5
Notwithstanding the anticipated vacancy spike in 2018 due to a large
2% injection of supply, the overall retail vacancy rate appears to be steadily
0.0 0%
trending down to below 7%, a notable improvement from the peak vacancy
levels in excess of 8% during 2016-17.
-0.5 -2%
We advise landlords to be flexible and practical about setting rents in order
Net Supply (LHS) Net Absorption (LHS) Vacancy (RHS)
to support occupancy in the quarters ahead.
Source: Colliers International Singapore Research, URA
2
COLLIERS SEMI-ANNUAL RETAIL | SINGAPORE | H1 2018 | 21 AUGUST 2018
Singapore | Retail Sales Index (Constant Prices) and Tourist Arrivals Singapore | Retail Sales Sub-Segments
YOY % change YOY % change
15% 2015 2016 2017 2018 H1
10%
10% 5.6%
1.4%
5%
0%
-0.8%
0% -2.4% -2.1%
-4.4%
-5.9%
-5% -10%
-10%
-20%
Retail Sales Medical Wearing Computers & Watches & Department Food Retailers
Index (ex Goods & Apparel & Telecoms Jewellery Stores
Motor Toiletries Footwear Equipment
Tourist Arrivals Retail Sales Index (ex Motor Vehicles) Vehicles)
Source: Colliers International Singapore Research, Singapore Tourism Board, Department of Statistics Source: Colliers International Singapore Research, Department of Statistics
Retail sales declined, but remain The Wearing Apparel & Footwear segment also Consistently strong performance by the tourism
appeared to be turning the corner (+1.4% YOY) sector
cushioned by tourist arrivals into positive territory, following declines during
Tourist arrivals have risen steadily since 2015.
In June 2018, the retail sales index (excluding 2016-2017.
During H1 2018, total tourist arrivals clocked in
motor vehicles) at constant prices declined 0.8% Meanwhile, the food and beverages (F&B) at 9.19 million, a healthy 7.9% YOY increase from
YOY. There were mixed performances among the services index exhibited some recovery the same period last year. This re-affirms our
retail sales sub-segments. sentiment in June 2018, with four out of five expectations for the rental recovery to be led by
Computer & Telecommunications Equipment fell components seeing YOY growth. ground-floor rents in the Orchard Road shopping
sharply (-4.4% YOY) amidst a dearth of new belt, which is a mainstay with tourists.
Fast Food outlets saw continued robust growth
gadget launches, undoing its strong performance momentum (+8.2% YOY), pushing the overall H1 2018 tourism growth was driven by
in 2017. Food Retailer sales fell 2.1% YOY, performance of the F&B segment into positive substantially increased arrivals from the
chalking up a cumulative fall of 28.5% since territory (+1.6% YOY). American and European markets (+14.5% YOY
January 2016. and +10.0% YOY respectively). Nevertheless, Asia
This aligns with most mall operators’ strategy of
However, there was sustained strength in the continued to make up the greatest proportion of
increasing the allocation of floor space towards
Medical Goods & Toiletries segment (+5.6% tourists (77%) during H1 2018, with China,
F&B providers, albeit with an eventual ceiling
YOY). Indonesia and India remaining as the top three
due to market saturation.
feeder markets respectively.
3
COLLIERS SEMI-ANNUAL RETAIL | SINGAPORE | H1 2018 | 21 AUGUST 2018
Beyond shopping and F&B; Meanwhile, the gym operators Fitness First and Supply (Planned & Under Construction)
GymmBoxx opened new centers at SingPost
activity-based tenants led the Centre and JCube respectively.
Downtown
foray during H1 2018 In January 2018, the Australian game arcade
Outside
Central Core, 19%
2011
2012
2013
2014
2015
2016
2017
2018
We view retail properties with a sizable market catchment, well-
*Investment sales only include transactions over SGD5 million. “TTM” refers to trailing 12 months.
differentiated tenant mix, or potential for future catchment growth as
attractive investment opportunities. Source: Colliers International Singapore Research, URA
5
Primary Author: For further information, please contact:
Govinda Singh
Executive Director | Valuation & Advisory Services | Singapore
Contributors: +65 6531 8566
govinda.singh@colliers.com
Kenneth Lim
Tang Wei Leng
Executive | Valuation & Advisory Services | Singapore
Managing Director | Singapore
+65 6531 8654
+65 6531 8688
kenneth.lim@colliers.com
weileng.tang@colliers.com
For the latest news from Colliers, visit our website or follow us on