13 major malls opening over the next five years

But profitability's in question with retail sales slowing.

The approaching festive season  brought little cheer as the market battled sluggish economic growth and continued appreciation of the Singapore dollar.

Retail sales (excluding motor vehicles) recorded  a positive growth of 1.3% YoY in  October. Savills however notes that  since April, growth  has decelerated to between -0.6% and  4.1% YoY, while sales of watches and jewellery, an indicator of discretionary spending, contracted for the sixth consecutive month in October.

Here's more from Savills:

The Monetary Authority of Singapore  (MAS) announced in October that it will allow the Singapore dollar to  appreciate at its existing pace to  combat inflation. Economists had  earlier predicted that the MAS would  ease its monetary stance to encourage  spending and spur economic growth.

According to preliminary estimates,  the Singapore economy grew by a  mere 0.3% YoY in Q3 but shrank 5.9%  quarter-on-quarter (QoQ).

Meanwhile,  the contraction in the manufacturing  sector for the i fth consecutive month  in November raised fresh fears of a  technical recession.

Retailers cautious on  expansion plans 

Retailers were generally cautious  on their store expansion plans in the second half of this year, with  some planning to consolidate their
businesses. However, new entrants  and existing retailers who increased  their footprint were offered attractive  rents in good locations.

Most store expansions involved  internationally renowned brands  such as H&M, Isetan, Lowrys Farm,  Sephora, Toys”R”Us and Uniqlo,  largely targeting the mass market.  H&M, for example, has opened its  second store in ION Orchard and will  have its third one in Jem in Jurong  East. Toys”R”Us and Babies”R”Us  opened two adjoining stores in City  Square Mall with a combined area of  25,000 sq ft. This is the maiden foray  into Southeast Asia for Babies”R”Us.

The brands’ big-store formats i well in the current economic climate,  contributing signii cantly to the commitment levels at new malls as
well as drawing other tenants to the  projects. orchardgateway is more than  65% leased while Westgate in Jurong  East is more than 50% pre-committed  ahead of their target opening in the  second half of next year.

US furniture  store Crate & Barrel has taken up  the entire 20,000 sq ft of space at  orchardgateway @ Emerald.

Over in Jurong East, Isetan will have  its fi rst supermarket outside Orchard Road in Westgate.

Together with a  department store, Isetan will occupy  some 59,700 sq ft of space spanning  three storeys. Westgate will also  house Fitness First Platinum, Food  Republic, My First Skool childcare,  children’s fitness centre My Gym and music school Yamaha.

Meanwhile,  Jem benefitted from early premarketing activities, having pre-leased more than 90% of its space less than one year before its target opening.

New supply
Two malls – Plaza Singapura’s new wing and Chinatown Point – welcomed shoppers in November, in time for the year-end festivities. Formerly The Atrium@Orchard, the new wing brings the total NLA of Plaza Singapura from 498,150 sq ft to 629,000 sq ft.

Major tenants in the new wing include  new-to-market players such as buffet restaurant 1 Market (11,000 sq ft) and multi-label Japanese store JRunway (3,600 sq ft), as well as leading retailers GAP, Lowrys Farm, Uniqlo and  Sephora.

November also saw the reopening of Chinatown Point, following a year of  renovation, with a total retail GFA of 311,725 sq ft. Targeting the PMEBs (professionals, managers, executives and businesspeople), the mall has been carpeted and houses over 200 shops such as Cortina Watch, Eat at Taipei, Rays Hair Salon, Samsung, Sunglass Hut and The Coffee Bean & Tea Leaf.

North and South Grandstands, a 350,000-sq ft lifestyle destination on the site of the former Singapore Turf Club in Bukit Timah, is now around  80% occupied. Monthly rents were said to range from S$9 to S$12 per sq ft on the ground l oor and S$4 to S$6 per sq ft on upper l oors. Master tenant Cogent Land Capital designated 30% of the space to retail and services, 30% to F&B, 30% to children’s enrichment centres and 10% for sports  activities.

Among the project’s anchor  tenants are Hansang Korean Kitchen  & Market (13,000 sq ft), PasarBella (30,000 sq ft), Ristorante Da Valentino (10,000 sq ft) and TungLok-Xihe Peking Duck (15,000 sq ft). Separately, the asset enhancement  of ION Orchard culminated with the opening of H&M’s second store and  Crate & Barrel’s inaugural store in Asia.

Rents
Average monthly prime rents on  Orchard Road inched down to S$35.1 per sq ft in Q4 from S$35.2 per sq ft in Q3. Rents for units on street level held i rm, but those on the second  storey weakened. Landlords were also more receptive to big-format stores, although their rents could be in the  low teens, even in prime locations.

Prime suburban rents remained i rm at  S$31.1 per sq ft per month. 