Concerns over high tenant churns in retail market is exaggerated: RHB

Occupancy levels are still high.

According to an RHB report, given much concern over tenant churn within the retail scene, RHB has been monitoring the retail occupancy rates very closely, and theyconclude that the concerns over high tenant churns have not been well justified. 

Occupancy levels within our retail REITs coverage for the quarter remained high, from 96.5% to 98.2%.

Should occupancy levels fall below 90%, this would then raise flags, as it would signify poor demand from tenants.

Here's more from RHB:

In addition, the dip in occupancy levels in the recent quarters is not a concern, in our view, as the respective REIT managers are repositioning their malls, so as to remain attractive and relevant to target markets.

Our team expects more new-to-market names to flow into the market as: i) retail landlords continue to put in efforts to
rejuvenate the retail scene in Singapore, and ii) Singapore is a stepping stone for international retailers to enter the ASEAN retail market.

According to research conducted by CBRE in May 2015, Singapore is ranked second for the hottest city for new retailer expansion, as it introduced a total of 58 new retail brands last year.

Just ahead of Singapore is Tokyo, which brought in 63 new retail brands into its retail scene.

Given the cosmopolitan consumer market in Singapore, CBRE is expecting international retailers to continue to fill up vacancies as they treat the republic as a test bed for the South-East Asian market, especially by European retailers who experience sluggish retail markets in their regions.

We provide a list of prospective international retailers below who might seek to expand in Singapore as they do not yet have presence in the country.

With many more names new to the Singapore retail market, we think that demand for retail space in the local scene will continue to persist.