The Ever-changing Face of Retail in Singapore
From massive to exciting to dramatic - changes in Singapore’s retail scene offer better value and experience for shoppers
Issue: Mar 2015
Plaza Singapura, Singapore’s oldest mall, has kept up with the times; When the mall opened in 1974, it was the country's first multi-storey shopping mall; Forty years later, and after a major renovation in 2012, it now boasts a new extension, and is directly connected to one of Singapore’s largest MRT interchanges, Dhoby Ghaut MRT station, which serves three main train lines
The retail scene in Singapore has undergone massive changes over the last 30 years. In the late 1980s, there were only a few shopping malls with three prominent ones, namely Plaza Singapura, Marina Square and Wisma Atria. These malls usually comprised a few anchor tenants who took up as much as 50 percent of the total Net Leasable Area, and shops such as bookstores and electronic shops that catered to the needs of the entire family. In Plaza Singapura for instance, both Yaohan and OG Elite were anchor tenants occupying at least four floors in the development. Tokyu and Metro, on the other hand, were main occupants at the two strategic ends of Marina Square.
The Wave of Change in the Suburbs
It was in the 1990s that the retail landscape saw tremendous growth especially in the suburban area. This was in tandem with the Urban Redevelopment Authority’s (URA) Concept Plan to have decentralised regional and sub-regional commercial hubs. These malls are usually located close to main transportation hubs such as MRT stations and/or bus interchanges. Within a decade, the suburban retail stock had grown seven-fold from just 500 million sq ft in 1991 to approximately 3.5 million sq ft in 2000. Northpoint Shopping Centre was the first suburban shopping mall that opened in 1992. It was the first time that some of the departmental stores such as John Little, Marks & Spencer and Toys “R” Us opened their first outlets in the heartlands. New retail trends also surfaced during this decade where shopping was interweaved with leisure, entertainment and education to create a more holistic experience for shoppers. Junction 8 was one of the first malls that had a cineplex and a national library located within the mall itself.
Entering the Sphere of Investment
In 2002, there was a dramatic transformation in the retail landscape with the listing of Real Estate Investment Trust (REITs). The typical landlord (developer) and tenant (retailer) relationship in a mall was transformed with the listing of REITs. The role of the landlord was passed from developer to asset manager, while shoppers can also have vested interest in these malls as shareholders of the listed REITs. In Singapore, CapitaMall Trust was the first REIT listed on the Singapore Stock Exchange on July 2002. It has since grown from three malls (Junction 8, Tampines Mall and Funan DigitaLife Mall) to 16 malls (including The Atrium@Orchard, Bugis Junction, Bugis+, Bukit Panjang Plaza, Clarke Quay, Funan DigitaLife Mall, IMM Building, Junction 8, JCube, Lot One Shoppers’ Mall, Plaza Singapura, Raffles City Singapore, Rivervale Mall, Sembawang Shopping Centre, Tampines Mall, Westgate) as of December 2014.
(Left to right) Tampines Mall, Junction 8 and Lot One Shoppers’ Mall are among the 16 malls under CapitaMall Trust, the first REIT listed on the Singapore Stock Exchange
The nature of REITs constantly challenges the asset managers to think out of the box to create better value for shareholders. This includes growth strategies to acquire properties and initiatives to enhance existing retail assets. Bishan Junction 8 was the first mall to adapt to the idea of decanting in 2004 where it transferred 70,000 sq ft of Gross Floor Area from the office tower to the retail space on Basement, Level 1 and 2 of the mall. The average rent has also increased by approximately 50 percent between July 2002 to December 2004. The office tower was, in turn, handed over to charity for non-profit activities.
Junction 8 in Bishan, Singapore was the first mall to transfer 70,000 sq ft of Gross Floor Area from an office tower to the retail space within the mall
Creating Greater Value in the Heart of the City and in the Heartlands
Since 2010, Singapore retail scene has grown even more colourful and vibrant with the continued success of suburban malls and the transformation of the Orchard Road district with the opening of new city malls such as ION Orchard and 313 Somerset. More international retailers such as COS, PANDORA, Kinokuniya, H&M, Robinsons and Isetan, which previously only had a presence in urban areas, have also opened stores in the western part of Singapore including Westgate.
City malls such as ION Orchard (left) suburban malls like Westgate (right) offer vibrant shopping scenes
Further changes abound
The retail sector in Singapore is likely to continue to evolve as new retail formats emerge. Online retail start-ups, from simple fashion blogshops to heavily-funded online retailers, have provided viable alternatives to the Singapore shopper. Mustafa Centre, a one-stop department store in Little India, is currently the only physical 24/7 retail mall in Singapore. In recent years however, supermarkets have also started having 24/7 outlets in select locations. Even in this non-discretionary consumer segment, in addition to new internet purchasing and delivery services provided by traditional supermarkets, alternatives such as start-up online grocers have grown in popularity. In the warehouse retail scene, Big Box opened late last year, offering furniture, consumer electronics and sporting goods as well as a hypermart. Incorporating elements of online shopping, customers can also order non-perishable items and pick them up via a drive-through. These innovative new retail formats have provided shoppers in Singapore with exciting alternatives, and will continue to keep our local retail scene diverse and vibrant.
This article is contributed by Neo Poh Har and Yip Kai of Group Research, CapitaLand Limited