SINGAPORE – More than a decade’s supply of retail space is under construction in Singapore. As the competition heats up, retailers in existing malls are placed under pressure as owners are forced to refurbish.
Construction is well underway at shopping malls in suburban Jurong, including Jem and Westgate. Along with Waterway Point in Punggol, they will house some one million sq ft of commercial space.
Experts say 3.6 million sq ft of retail space is expected to be completed over the next four years. “This is a substantial amount which is equivalent to roughly about 10 to 11 years of supply based on the last 10 years’ average,” said SLP International executive director of research and Consultancy Nicholas Mak.
Strategically located in areas of high population growth, the new space may not create an oversupply, but it may have contributed to a frenzy of makeovers of existing malls. Wisma Atria, for instance underwent its third refurbishment mid last year since its completion in 1986.
“To ensure the least disruption to our tenants and shoppers, we have phased the asset redevelopment into two parts. By phasing out the project, we have seen minimal impact on shopper traffic at Wisma Atria, with the mall registering a 9 per cent increase in footfall to 29.3 million in 2011,” said its manager, YTL Starhill Global, in a statement.
And some retailers in less swanky malls are feeling left behind. “I hope the management will do some marketing event to catch the people coming here. If you do some interesting things to carry the customer in, they will be willing to spend here,” said Mr Elvis, the owner of FB outlet Pizzaroni at CityVibe mall in Clementi.
Experts say continual renewal is especially necessary at smaller malls that are under-performing. “In some cases it has fairly weak retail asset managers looking after the portfolio and, of course, in some cases it is lacking of the desired tenant mix,” said HSR Property special adviser Donald Han.
While some retailers may have to suspend operations due to renovation work, refurbishment can benefit them in the long run, particularly with competition rising from all sides. Mr Han said: “Singaporeans like to travel and when they travel, they spend their strong Singapore dollar in countries like those in Europe and in the US, so that’s one leakage. The other potential leakage out of the Singapore retail market system is the growing popularity among e-commerce which is your e-retail and also mobile retail.”
Looking ahead, real estate consultancy firm Colliers International said in a report that the litmus test for retailers is likely to set in post-Chinese New Year. Retailers are expected to remain cautious on business expansion and operating costs in light of the uncertainties, and are thus expected to be more selective in taking up new space.
Nevertheless, Colliers International added that Asia’s increasing importance as a region for American and European-based retail brands could mitigate the downside risks.
Therefore, the local retail scene should continue to see new international retailers actively looking for space to expand in Asia in view of the weaker consumer demand in the West.
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