Mall tenants report healthy sales as shopper traffic remain robust

Upto 7.8% sales growth in 1H.

Shopper traffic continues to remain robust. Shopper traffic and tenant sales at the various retail REIT portfolios continued to increase in 1H13 (CMT’s malls reported tenants sales increasing by 3.3% y-o-y with most tenants reporting stronger tenant sales y-o-y).

DBS Vickers Securities believes the retail property sector is likely to see another year of fairly resilient performance.

Here's more from DBS Vickers:

MCT’s VivoCity reported a robust 5.6% y-o-y growth in retail sales for the quarter ended Jun’13 while FCT and MGCCT’s properties saw tenant traffic and retail sales increasing by 5.0% and 7.8%, respectively.

We expect the suburban malls to continue outperforming Orchard Road malls, underpinned by the opening of new outlets by retailers in the non-luxury segment and fast fashion outlets. These typically operate out of Orchard Road and have been expanding their presence in regional town centres like Jurong and even in Suntec City with H&M and Uniqlo as new tenants. These regional centres with enhanced offerings can potentially see stronger shopper traffic and sales, and could translate to higher rental income for landlords through gross turnover clauses tied to leases.

Renewal activities going forward are likely to remain fairly stable, with c12-25% of leases expiring (by revenues). We expect the malls to continue seeing strong retention levels.