More than 1,000 strata-titled retail shops are estimated to be completed in Singapore over the next 12 months. According to consultancy Chestertons, this will account for 42 per cent of the supply pipeline between now and 2019.
The concern is whether there is enough retail demand to absorb the supply, particularly units that are not well located.
In recent years, there have been more mixed-development projects being built – with residential and retail components. A good number of these shops are strata-titled or independently-owned. One key issue with such properties is that there is no control over tenancy mix.
Chestertons said that according to estimates, strata-titled retail shops will account for about 15 per cent of the total retail space available by 2019. Of these, 345,000 square feet or about 1,300 strata units are expected to be completed in the next 12 months.
SLP International Property Consultants said some upcoming projects with strata shops include Alexandra Central, City Gate, Eon Shenton, NeWest, Junction Nine/Nine Residences and The Promenade@Pelikat.
MORE INVESTORS BUYING STRATA SHOPS
Many investors started buying strata shops in the last two to three years after the Government implemented more cooling measures on the residential property segment.
Analysts said some of these investors may not fully understand what they are buying into, as the considerations are quite different from buying an apartment. Considerations include location, accessibility via public transport, size of the population catchment, unit mix and location of unit within the mall, as well as the type of tenants there.
Mr Donald Han, Chesterton’s managing director, noted that most of the buyers are not owner-occupiers and have purchased properties with the sole purpose of renting them out.
“And if they have bought a development that is not close to any amenities or any employment hubs or not near the MRT, for instance, they will probably be caught between a rock and a hard place. Some of the smaller malls may not be able to compete with the larger malls. Another reason why smaller malls may not do well is lack of car parking,” Mr Han said.
POSSIBILITY OF OFFERING NICHE SERVICES
Still, some analysts said that over time, the collection of shops could evolve to offer niche services or products, much like successful strata-titled mixed developments like Far East Plaza and Queensway Shopping Centre, for example.
Said Mr Desmond Sim, head of Research Singapore at CBRE Research: “These shops available in the market could present some opportunities for SMEs (small and medium enterprises) or smaller entrepreneurs who might think that the bigger malls present a very high occupancy cost. They might take advantage of presumably lower rentals offered by the huge supply that is coming up, to take up space there and create a niche of their own.”
But others suggest that the Government could look at new restrictions for developers on strata-titled sale for certain sites in its land tender.
“They may have to stipulate conditions like, for example in the first 10 years after the project is completed, they are not allowed to be strata-titled and sold. So in this way, the single company has to own and manage the development. Most likely, this company would be an experienced shopping centre operator and we could see a better quality shopping mall,” said Mr Nicholas Mak, executive director for research and consultancy at SLP International Property Consultants.
SLP suggests that, for example, it could perhaps be applied on an upcoming mixed-use site at Holland Village under the Government Land Sales programme.
In 2013, the Urban Redevelopment Authority introduced measures to curb the proliferation of tiny shops. Its guidelines ruled that the average retail unit size should not be less than 50 square metres and also stipulated minimum corridor widths for retail component of new commercial and mixed-use projects.
Source : Channel NewsAsia – 30 Sep 2014