ASEAN could gain from Singaporean retail advances

January 25, 2024 | 11:06
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The retail outlook for ASEAN and Singapore in particular is optimistic for this year, with possible benefits for the region’s retail property sector as companies springboard beyond the city-state.
ASEAN could gain from Singaporean retail advances
If a retailer can make it in Singapore, it can usually make it anywhere

Despite a mixed global economic outlook for 2024, ASEAN’s growth seems more sanguine, analysed Maybank Investment Banking Group economists in their Perspectives report earlier this month.

“ASEAN economies look poised to be the bright spot in a clouded global outlook as they step up GDP growth from 4 per cent last year to an expected 4.7 per cent in 2024. This will far outpace the global economy’s forecasted growth rate of 2.8 per cent, down from 3.3 per cent in 2023,” the report noted.

“Green shoots are sprouting in manufacturing and exports, brightening the outlook for trade-sensitive Asian economies,” wrote the economists, led by Dr. Chua Hak Bin.

Analysts at property consultancy Cushman & Wakefield (C&W) believe that Singapore, being a travel hub for the region with spillover effects for the domestic retail property sector, will benefit from the recovery in inbound tourism. They expect the market segment to also be supported by domestic economic improvements.

According to the consultancy’s January market update, retail sales should benefit from a strong line-up of events and concerts, continued recovery in visitor arrivals from China, the government’s cash support to cushion some tax hikes, and economic improvements including moderating inflation.

“Although the still high mortgage rates and elevated prices would continue to temper local consumption, especially for discretionary purchases such as furniture and jewellery,” the report said.

Singapore’s prime shopping district in Orchard is poised to lead the recovery in retail rental rates. C&W note that the prime shopping belt will continue to draw new-to-market and international retailers who look to showcase their brands in the region.

With Singaporeans’ preference for dining out, the food and beverages (F&B) scene dominated the bulk of retail rentals over 2023 (49 per cent). In its Singapore Market Outlook 2024, C&W noted that landlords are exploring converting vacant retail lots to F&B usage.

F&B is not the only segment that is seeing an expansion in rentals. Fashion and lifestyle brands are also seeing an uptrend, with 39 per cent of store openings in prime malls over 2023 in this segment. Hybrid working conditions have changed shopping trends with consumers tilting towards health, wellness, and comfort, the consultancy observed.

The city-state’s business friendly environment continues to make it an attractive initial destination for new businesses looking at regional expansion. They look to tap the growth in inbound tourism, with Singapore a popular travel hub for the region.

In terms of new moves in retail, Canadian coffee house chain Tim Hortons debuted at Vivocity in 2023 with talks that it is planning to expand into Malaysia and Indonesia. Meanwhile, Chinese digital brand Neiwai opened its first overseas store in Raffles City last year, as the springboard for its global thrust.

New Japanese and South Korean restaurants Milan Shokudo, Bulgogi Syo, and Tori Sanwa have also launched in the city, with three outlets each.

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By Dennis Khng

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