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Retail malls: Rest in peace? Not so soon …

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An abandoned shopping cart: will retail malls face the same fate?

The rising penetration of online retail sales has dampened the occupancy and rental prospects of physical retail malls. This has led to many observers to question their relevance. Some are even predicting their demise and that there’s no future for them. We think contrary to this. We believe physical malls are here to stay, and they still have a role to play. However, it will not be business as usual. Malls will need to reinvent themselves, evolve, and find ways to complement online retailing. There will be fresh rounds of consolidation, new partnerships and new strategies. There will be winners and losers. The market may also rethink ways to assess mall values and rents.

Key summary:

  • We monitor mall rents = Footfall x Spending per footfall x Occupancy cost ratio. With a rise in online retailing, physical malls are working harder to increase their footfall and spending per footfall, by reconfiguring tenant mix and increasing loyalty programs.
  • Market studies of the US and Europe showed that physical and online retail can co-exist and complement each other. Multi-channel retailing* is an opportunity not a threat to mall operators.
  • Even online retailers like Amazon and Alibaba are opening physical stores and buying over malls, which is further testament to the importance of physical stores. According to them, physical stores help to better engage customers, breed brand loyalty and gain trust, which in turn drives online sales.
  • Overall, physical malls remain relevant but they need to evolve. An ultimate “future-ready” mall is one where they create a seamless retail ecosystem, supported by multi-channels, with added components of big-data technology and logistic supply chain management. At least, until they get disrupted again in the future.
  • The winners are physical malls that have strong location attributes (like all real estate), optimal mall configurations, and roadmaps in place to roll out digital strategies. The losers will be those located in bad locations, limited scale and capital to invest in digital strategies, as well as strata-titled malls that lack mall management control.

* Multi-channel retailing is a marketing strategy that offers consumers multiple ways to buy products anytime, anywhere and from any medium, such as physical store, shopping website, mobile phone, interactive TV, and catalogue order mails.

  Continue reading “Retail malls: Rest in peace? Not so soon …”

Land market – Bid to win, or bid to try your luck?

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Bid to win, or bid to try your luck…

Developers often enter into land bids with different strategies. They may aggressively “bid to win”, especially when their landbank has been depleted. Other times, they may choose to bid low, just to try their luck, hoping that no one else bids above them. Very often, these strategies will lead to different outcomes for their profit margins.

Continue reading “Land market – Bid to win, or bid to try your luck?”

DimSum Chat with Dr Boaz Boon: Design Thinking, and its relevance to the real estate market

We had a wonderful chat session with Dr Boaz Boon, Director of VestAsia and Founder & Principal of Thred, Singapore. Dr Boon was also ex-Capitaland, where he led the research, innovation and training teams at the Group. Hear what Dr Boon says about Design Thinking, how it originated, how has it been adopted in industries, and how it can be applied to the real estate market, for example in shopping malls, and even in our daily lives !

Dim Sum Chat with Mr Alan Cheong of Savills, Singapore : Outlook discussion on Singapore residential, office and retail sectors for 2017/18

We recently caught up wih Mr Alan Cheong, Senior Director of Research & Consultancy, Savills Singapore. Join us as we discuss about Singapore property. For private residential, where are home prices headed, does Alan agree with the market consensus of a huge oversupply, and why new launches tend to be more resilient than resale market? For offices, how are offices navigating the downturn, and what is Alan’s forecasting model telling us about when rents could hit the trough ? For retail,  what are the softer F&B activities telling us about local retail scene, and why is budget air travels competing away demand for local shopping?

 

Continue reading “Dim Sum Chat with Mr Alan Cheong of Savills, Singapore : Outlook discussion on Singapore residential, office and retail sectors for 2017/18”

Y-series: 5 reasons why conservation shop-houses in Singapore remain popular among investors

Continue reading “Y-series: 5 reasons why conservation shop-houses in Singapore remain popular among investors”