2 charts to prove Singapore retail's rosy outlook

Pre-commitment rate to rise further.

According to Macquarie Research, retail rents and occupancies should remain resilient in 2014, underpinned by an improved macroeconomic environment and retail sales.

While supply of retail malls would grow by 9% YoY, pre commitment YTD is over 20% and should rise further in 1Q14 post the traditionally quieter leasing period in 4Q and according to our channel checks with landlords/consultants.

Singapore has also traditionally been a supply-led occupier demand retail market, evidenced by a historically strong retail occupancy rate which never fell below the 90% mark (See Chart1). While Singaporeans continued to enjoy healthy wage growth of 6.7% in 2012, average household size remains within the 3.5 persons range.

This implies a rising amount of disposable income per household member, which together with a historically low unemployment rate, should support positive consumer sentiment (See Chart 2). Along with rising tourist arrivals, this could provide upside risks to our retail sales projections.

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