Chart of the Day: Here's proof that retail property is still budding in Singapore

A growing population could spur retail spending.

According to CIMB, a growing population equates to more retail spending. Retail penetration in Singapore is still fairly low relative to other developed countries in Asia and could see more scope for upside.

The firm expects plans to develop land for housing within existing matured estates. This will drive residential catchment for malls.

Plans to site more commercial activities near homes through the creation of regional centres would likewise imply increased working population catchment. 

Here's more from CIMB:

This increased population catchment could drive tenant sales and, in turn, rents. In future, the low retail penetration and a rising population would provide room for acquisitions by retail landlords, particularly with the creation of new towns and housing estates and regional centres and as improved transport infrastructure enhances transport connectivity for malls.

We believe that the rising population and commercial space allocation locally will benefit retail REITs, especially those with assets near major planned new towns.

Apart from retail tailwinds, MCT (Outperform) would benefit from redevelopment plans at the Southern Corridor - the government is hoping to decant container port facilities (at City Terminals and Pasir Panjang when the lease expires in 2027) which could free up 325ha and 600ha of waterfront land, respectively for new commercial and housing developments, all of which would benefit both assets within its portfolio and its pipeline from its sponsor.

FCT (Outperform) could also be a beneficiary given tailwinds at its two larger assets: NorthPoint could benefit from the addition of homes in Yishun while Causeway Point could benefit from increased catchment at the upcoming Woodlands Regional Centre. Likewise, CMT (Underperform) may benefit from its suburban retail exposure at Jurong Gateway and Tampines Regional Centre though we remain cautious on valuations.