Singapore's malls are one click away from irrelevance, though the investment trusts that own them are carrying on as if nothing has changed.
The first hint of trouble showed up in January when department store John Little shut down after a 174-year run. Then, in July, Amazon.com Inc. introduced its two-hour Prime Now delivery service, choosing the city-state of 5.6 million people as the testing ground to fine-tune its Southeast Asia ambitions.
The landlords don't appear all that perturbed; at least not yet. CapitaLand Mall Trust, the island's biggest retail real-estate investment trust, announced 2.78 Singapore cents (2 cents) in dividends last week, unchanged from a year earlier. That's an annual yield of almost 5.5 percent at a time when the 10-year Singapore government bond offers only 2.2 percent. The tantalizing premium is keeping investors hooked.
related: Empty Stores Multiply as Singapore No Longer Shoppers’ Paradise
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Empty shopping malls in Singapore
I got this picture from Mothership and the picture was taken by Lim Weixiang. It shows how bad the shopping centres are in Singapore. Most shops are empty and tenants of other open shops are concerned. But do you know who should be blamed for this? Easy. The Internet and the greedy landlords.
It was about 4 years ago when I was setting up a sound system for a restaurant. The owner of the restaurant, who came from Hong Kong, was bemoaning the expensive rents one had to pay here to the landlords. Apparently, the landlords here have a “take it or leave it” attitude as far as rent prices are concerned. Also, another thing is the prices of the car-parks here in Singapore. Just the other day while I was at Ocean Financial Centre to visit a client, just for a couple of hours, the car-park charges came up to $14!
As for the Internet, check out Qoo10, Carousell and the other blog-shops online. You can get your shopping done online and delivered to your house. You do not have to go into town. I do most of my shopping this way and I suspect many others do too. So hopefully this gives a wake-up call to all those greedy and conniving landlords. Lower your rent. You do not have to charge a sky-high price for it. You are pricing yourselves out of the market and when people do not rent your premises, it is your own fault.
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At some suburban malls, retailers confront the sound of silence
It is an increasingly common sight these days in the heartlands: Spanking new mixed-use developments with rows and rows of empty shop spaces plastered with posters and banners screaming “For Rent” or “For Sale”.
From Kensington Square along Upper Paya Lebar Road and Novena Regency to The Midtown @ Hougang and MacPherson Mall, to name a few, the retail slump — which first hit the prime shopping districts several months ago — is starting to bite suburban retailers, and the impact on strata-titled malls in housing estates is stark. At the real estate investment trust (Reit)-owned malls such as Jurong Point, Nex in Serangoon, Northpoint in Yishun and AMK Hub, landlords are pulling out all the stops through promotions and loyalty programmes to stave off the chill. However, amid the economic slowdown and uncertain job market, vacancy rates are creeping up and tenants are reporting lower earnings as shoppers tighten their belts, even during the festive period.
Data from property firm Jones Lang Lasalle show that the average vacancy rate of suburban malls, including Reit-owned and strata-titled shopping centres, has more than doubled from less than 1 per cent in 2013 to 2.4 per cent in the fourth quarter of last year. Average monthly gross rents for prime retail space in these malls have also fallen by 7.1 per cent in the final three months of last year, compared with the fourth quarter of 2015. The decline is catching up with the fall of 7.5 per cent in rentals for prime retail space in Orchard Road over the same period.
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Several tenants moving out of One Raffles Place mall
But 3 years on, all but one of these crowd-pullers have shut or will move out by next month, as the retail slump claims yet another victim.
American lingerie brand Victoria's Secret, Japanese fashion retailer Uniqlo & South Korean cafe Paris Baguette have already closed their stores at the mall, which is next to Raffles Place MRT. Travel products store Tumi, Swiss watch brand Swatch, Danish jeweller Pandora & shoe brand Melissa, have decided not to renew their leases and will shut soon.
A check by The Straits Times last Friday found that of the 6-storey mall's 113 tenants, at least 14 have closed. At least another 13 will be moving out by next month when their three-year lease ends - which means nearly a quarter of the mall's retail space could be empty.
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WHY ARE SINGAPORE’S SHOPPING MALLS EMPTY?
Despite opening its doors just a short 4 years ago, all it takes is a quick walk through JCube to see that a large number of their units are shuttered and devoid of tenants.
John Little, the oldest department store in Singapore, is also shutting down its last store in Plaza Singapura soon.
Statistics Singapore shows that the local consumer spending has increased to approximately SGD 35000 million in 2016, and yet, the vacancy rate for retail tenants is increasing as well.
related: Why Are Singapore's Shopping Malls Empty?
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Old retailers in Singapore will perish
A walk through any of Singapore’s shopping malls nowadays, shows scores of empty shops as online retailers continue to kill off traditional retail outlets. This is what death looks like in Singapore; modern, newly renovated shopping complexes, with ominous and vacant boarded up shop fronts.
Developments like Suntec City, which recently underwent a US$410 million redevelopment plan have whole sections standing completely vacant and are littered with newspaper covered storefronts, as more than 70% of the Singaporean population now prefer to shop online.
A store assistant working in the complex, who wished to be identified as Mr. C. Ho. said “There used to be a spa on this level. It’s gone now. There was a bookshop too, but that has also closed. And that toy store a few doors down? It’s moving out after just four months.” Another shop owner said, “We see fewer than 10 walk-ins a day. Some days, we don’t even make any sales.”
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Singapore Malls Need to Change, And Funan Is Showing How
The Singapore retail scene is in dire straits. Empty shopfronts dominate the landscape and the once thriving Orchard Road is a pale shadow of itself. A combination of lacklustre promotions, non-diverse retail mix (do we really need another Uniqlo?) and cheaper online alternatives have made landlords and tenants scrabbling for an antidote for their ills.
Funan believes it has the answer. Although the new mall will only be officially opened in 2019, its developer CapitaLand just opened a retail show suite at the junction of Hill Street and High Street that is unlike any other showrooms we've been to.
Centred around The Tree of Life, the show suite, which is opened to the public, is a wood and steel structure that houses a variety of open platforms and studios for local makers to hold events and workshops. You can also check out the new features and retail offerings that Funan has incorporated into the mall, including a rock climbing wall, a futsal pitch and garden patch for urban farmers, and a bicycle track that runs within the mall.
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Singapore Malls Are Dead, As Occupancy Reaches Its Lowest Level In 10 Years
Can’t say that nobody saw this coming
As developers build more shopping malls all over Singapore, from the heartlands to the central business district, there’s bound to come a time when the bubble will burst, and there is an oversupply of shop spaces.
It seems like that that time is now. Mall Vacancies Highest In A Decade.
Walk into any shopping mall in Singapore today, and chances are, you will be greeted by empty or boarded up shop spaces, and this is no isolated occurrence either, as there are now the statistics to back it up.
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Singapore retail vacancies could worsen
Singapore retail vacancies could worsen warns property consultancy Cushman & Wakefield (C&W).
In a briefing paper, C&W says brick-and-mortar retailers will likely continue to consolidate store networks to address rising eCommerce sales and higher overheads.
The company cited MasterCard data showing consumer confidence has fallen to its lowest level since June 2009 during the first six months of this year.
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Real Singapore retail sales continue to decline
Real Singapore retail sales in May rose on April’s figures – but remain down year-on-year
According to Statistics Singapore, total retail sales (seasonally adjusted) increased 1.4 per cent in May 2016 over April. Excluding motor vehicles, retail sales increased an even better 2.3 per cent.
But compared to May 2015, retail sales decreased 3.3 per cent after removing motor vehicle sales from the data. Including vehicles, total sales rose 3 per cent year-on-year.
After seasonal adjustment, retail sales of watches & jewellery, furniture & household equipment, food & beverages, optical goods & books, department stores, apparel & footwear, medical goods & toiletries and petrol stations increased between 0.8 per cent and 6.5 per cent in May 2016 compared to April.
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ORCHARD MALLS CLUTTERED WITH SHOPS THAT FAIL TO EXCITE
Orchard Road's malls have come under scrutiny recently as several venerable department stores have closed shop and the latest addition to the sprawling shopping street, Orchardgateway mall, struggles to pull in consumers.
Analysts have cited the weak yen as a cause of Orchard Road's troubles. Tourists who once flocked to Singapore for the shopping are now choosing to spend their money in Japan, they say.
Yet this is only part of the story. Reporters who went down to Orchard Road on 6th June found one of the major shopping malls in Orchard nearly empty, even though it was a Saturday.
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4 signs that point to economic gloom in Singapore
You've probably heard your fair share of how Singapore is going through dark times with its economy slowing down. Just to reiterate this serious matter, the Monetary Authority of Singapore (MAS) in its latest analysis and assessment of macroeconomic workings that affect our economy, indicated that 'an outright recession is unlikely' though we all should brace ourselves for a darker gloom cloaking our economy.
If you haven't heard, here are 13 jobs in Singapore whose earnings have taken a hit. We sure hope you're not the ones affected, of course. Nonetheless, we at GET.com have compiled this list of 4 signs that suggest that Singapore is indeed facing an economic gloom.
Even if you aren't trained in economics per se, you're probably well aware that trade makes up part of our GDP. So, you know it's bad news for export-driven Singapore when our non-oil domestic exports (NODX) numbers in Singapore dipped to their lowest ever in 3 years - March's 15.6 per cent decline was more dire than the expected 12.3 per cent fall economists had forecasted.
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That empty feeling in Singapore's malls
On Orchard Road, Singapore's famed retail strip, the signs of change are easy to see: Venerable department stores have closed and a new commercial complex is struggling to gain traction with customers despite opening to much fanfare only a year ago.
One reason often put forward to explain the trouble facing the district is the weak yen. Japanese tourists who once flocked to Singapore for the shopping are now spending their money at home. That is only part of the story, however.
On June 6, a Saturday, a big shopping mall on Orchard Road was nearly deserted. And it is not the only one in trouble.
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4 Things Shopping Mall Landlords in Singapore Should Do With All Those Vacant Units
It seems like just yesterday when all the cool kids were hanging out in shopping malls. These days, the only people who think the Orchard Road malls are cool are Chinese tourists and taitais with beehives.
Everyone else has abandoned local malls in favour of hipster cafes in ulu neighbourhoods, and people now prefer to buy their stuff overseas or online. Heck, the fact that even Johor Bahru is now considered cooler than Orchard Road says a lot.
Unsurprisingly, the malls that have pretty much taken over Singapore and strangled the life out of space-starved Singaporeans with their H&Ms and Uniqlos are now falling prey to vacant units.
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No tenants ... And no shoppers
Potted plants are used to fill up space on level 2, where there appears to be more empty units than occupied ones.
The Nihon Street, which features Japanese food outlets with a strong following, looks like it is still in the works, with sections behind hoardings.
The entire section where Harvey Norman used to be has been cordoned off. A fitness & performance centre is slated to take over the space in October.
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Just how empty are Orchard Road malls these days?
Indeed, it appears that Singapore’s beloved and world-renowned Orchard Road shopping strip has been hit by tough times.
The inability to keep up with high rent, the arrival of big players muscling out smaller ones, the rise of well-stocked neighbourhood malls and online shopping are all factors that have impacted the performance — and general occupancy, really — of shopping centres in Orchard.
But just how bad is the situation these days? We hit six malls earlier this week between 5:30 and 6:30pm to take a look for ourselves.
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Orchard Road remains a location of choice
Shopping is to Orchard Road what food is to Katong
The 2.2km boulevard has more than 5,000 retail brands & has pulled in tourists & locals alike for decades.
It has faced and survived countless threats, including suburban malls, the rise of regional shopping hubs & even online shopping.
Research analyst Eunice Khoo, of CBRE Research Singapore, said the shopping belt still has many things going for it, including Government support.
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Mall bad news ... but some bright spots
An interior view of The Centrepoint mall. FOTO: ST FILE
In just over a year, clothing retailer Hang Ten has closed more than a 3rd of its stores.
The 12 outlets, in suburban malls, had been bleeding money. Consumers were spending less but Hang Ten's landlords were still charging high rents, said its general manager Andrew Kee.
"We started to close non-profitable suburban shops since Q4 2015 to reduce losses & just concentrate on a few strategic locations."
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Shoppers' paradise lost? Singapore's malls suffer as locals, tourists curb spending
After serving only a handful of customers in five hours on a recent weekday, Sam Goh said he was worried the sportswear shop he manages, LIV ACTIV, will eventually join other brands in leaving Singapore's Orchard Road shopping boulevard.
Singapore's reputation as a shoppers' paradise, which saw investors pour S$10 billion ($7.25 billion) into retail developments here in the past five years, is taking a pummeling because of weakness in the local economy and a drop in spending by tourists. Commercial space has increased by a tenth in that period, but vacancy rates have risen to 7.3 percent from 5.0 percent and industry analysts expect them to keep rising.
"Instantly when you enter this mall you see emptiness," said the 44-year-old Goh, whose shop gave up a quarter of its space last month to cut costs.
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No buzz in Orchard Road’s increasingly vacant malls
IT IS now getting more common to see vacant units or large hoardings covering shopfronts as you walk along Orchard Road, and these are not always because of renovation works. More tenants are giving up their spaces along Orchard Road, the prime shopping belt, amidst a gloomy economy. Urban Redevelopment Authority data shows that the vacancy rate in the Orchard Road area rose 1.2 percentage points to 8.8 per cent in the first quarter of the year, apparently the highest in five years.
Unfortunately, there is a vicious cycle to the retail industry, according to an ST article published on April 28. Imagine this: As customers walk past vacant or boarded spaces, they form a poor impression of that mall – one that would unlikely see them returning. This explains the decline in shopping traffic, which in turn discourages potential tenants from entering the retail market. It also creates losses for existing tenants, resulting in their exit from the retail scene. More units become vacant; the cycle continues.
Next, the rising popularity of e-commerce. There is no doubt that online shopping has won the hearts of many – for its convenience, affordability, variety – and is increasingly the preferred choice for more people.
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Are there too many malls in Singapore?
The other day I wanted to go to Kallang Leisure Park for some shopping but the taxi driver said that with the NDP rehearsals on that I should try another mall. I had my choice. Too much in fact. It got me thinking about whether there were really too many malls in Singapore and whether more time and resource should be spent on differentiating them with content and marketing.
On my journey we went past 112 Katong (I refuse to call it the terrible marketing gimmicks name of "I want 2"), Katong V and in between there are two more malls being developed, and this was all in the space of a kilometre on one road. All of these malls are in the shadow of the enormous Parkway Parade.
Then we made our way to the newly opened Paya Lebar Square and on the way passed the newly opened One KM -- all with virtually the same shops, just their competitors or sister shops -- and past the older City Plaza and sister mall. Surely too many malls in the same area for the catchment area?
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Shopping mall (big, empty designer stores)
On first impression, everything here seems unnecessarily large and pretentious: the hotel lobby, the (attached) shopping mall, the casino itself, even guest room dimensions (which feel devoid of furniture as a result), so the hotel lacks warmth. The unique architecture has instantly made it the defining structure of Singapore's skyline and as such rates will remain at a premium as everyone wants to have "stayed there, done that".
Some tips:
- MBS charges more than equivalent Singapore properties, so it pays to book well in advance to get their best rates, especially when short notice cancellation is always possible. HIgher prices are charged for high floors and for the city views everyone wants (the other side being harbour view = a highway, construction on reclaimed land, and hundreds of ships at anchor in the Straits beyond). Many harbour facing rooms have balconies, whereas the city view rooms do not.
- If a sky-garden visit is on your to-do list in Singapore anyhow, then staying here will save you $20 each, with the bonus that you can swim in the rooftop pool and choose to go up there whenever weather conditions are right (not always the case!). Serious swimmers are advised to get their laps in at the crack of dawn before it gets too busy.
- Rooftop and views aside, there's little to do here other than walking around the oversized, impersonal, designer-heavy shopping mall, hitting the casino (take passports, be ready for a smoky environment on the main gaming floor!) and eating above-average priced food... until there is more to do here this is not the place to stay more than one night if you want to experience the 'real' buzz of Singapore. Unless your focus is gambling one night is plenty, and thereafter move closer to Orchard Road or the MarinaBay shops in that order of preference.
- You're connected to the rest of Singapore by taxi only - or else a potentially sweaty walk to Marina Bay via the shopping mall and Helix bridge. Beware taxi queues at certain times.
- Some staff are clearly still on a learning curve, not surprising in such an ambitious new hotel.
- Breakfast buffet in main lobby is busy, but excellent
- Spa not yet finished, so for now makeshift gyms have been installed in a series of regular lower floor guest rooms
- hold onto any headwear at the rooftop pool in blustery conditions. Indeed swimming is not permitted if it's too windy (to protect swimmers from flying objects)
- the mall is devoid of stores regular travellers would shop at. Judging by the sheer size of some of the über-luxury goods outlets (most were empty) MBS are clearly expecting to attract vast hordes of high net worth visitors. If they do, their room rates will not get any cheaper
9 Departmental Stores that no longer exist in Singapore
Whiteaways
Fitzpatrick's
Oriental
Yaohan
Sogo
Tay Buan Guan
Daimaru
Carrefour
John Little
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