The $520 million sale of Chinatown Point to a foreign institutional investor emerged as the biggest sale transaction.

Retail property investment sales jumped 52 percent quarter-on-quarter in the second quarter of 2019 even as only two transactions were registered totalling $961 million, revealed an EdmundTie & Company (ETCo) report.

The $520 million sale of Chinatown Point to a foreign institutional investor emerged as the biggest sale transaction during the period, with an estimated entry yield of two to three percent.

The real estate consultancy firm noted that islandwide net absorption declined by more than 98 percent quarter-on-quarter to 5,000 sq ft during the first quarter of 2019.

Net supply also dropped by about 78 percent quarter-on-quarter due to lesser completions. With this, islandwide occupancy slightly declined by 0.4 percentage points quarter-on-quarter to 90.1 percent in Q1 2019.

“However, the opening of Funan with 325,000 sq ft net lettable area (NLA) and 95.0 percent pre-leased, is not expected to significantly impact occupancy rates in Q2 2019.”

ETCo said occupancy rate at Orchard/Scotts Road dipped by one percentage point quarter-on-quarter to 93.9 percent in Q1. Net absorption in other city areas contracted by 16,000 sq ft in Q1 vis-à-vis 102,000 sq ft during the previous quarter.

The suburban areas, on the other hand, saw net demand and supply for retail spaces slow in Q1, while occupancy rate marginally declined.

Despite this, prime located malls that offer easy transportation access as well as a diverse and well-managed tenant mix, continued to perform relatively well.

“With the opening of Jewel Changi and Funan in Q1 and Q2, respectively, and PLQ mall in H2 this year (totalling more than 1.2 million sq ft NLA), the sector remains challenging with tepid sales and growing economic headwinds,” said ETCo.

“However, the continued investment sale activity for retail malls suggests a positive outlook for the sector especially for malls that are well-connected to public transport and offer a well-managed tenant mix including more experiential and activity-based retail.”

The firm expects islandwide rental growth “to be mixed ranging from -2.0 to 2.0 percent in 2019 with the low supply pipeline from 2020 onwards likely to provide some support to occupancy rates and rental levels”.

Source: 19 Jul 2019, CommercialGuru