Your Essential Singapore COVID-19 Property Guide - Part 2 Commercial Property Market

 

In my earlier Part 1 of Your Essential Singapore COVID-19 Property Guide series, I have shared some insights on Singapore’s Residential Property Market amid Covid-19 outbreak.

Part 2 will cover a topic that is close to our heart... 

shop, eat, play & work!

Travel bans or partial lockdown (i.e., Circuit Breaker) or not, we still shop, eat, play & work right? 

Shopping

Online, online and online. While you may still pop by your neighbourhood hawker centre to or your nearest supermarket to do grocery shopping, we have relatively spent less time outdoors shopping during Circuit Breaker. 

Eating

No more dining out since the Circuit Breaker. I found the stock from my freezer depleting at a much higher rate as I hone my culinary skills. Family members being the guinea pig to my creations! For most of us, we either cook at home or resort to ordering food delivery or do takeaway. Facebook groups have started popping up consolidating and marketing wet market stall holders – Pasar, Hawkers, Restaurants and various eatery vendors. Searching for the various food options and facilitate ordering to satisfy my food cravings have become a breeze.  I am spoil for choices!! 

Playing 

You would have shelved your holiday plans ages ago! Did your screen time increase drastically? Mine sure did! Gym enthusiasts would continue to find creative ways to exercise at home or around their neighbourhood. If you are like me who is adamant to continue clocking your steps, You try to walk around your home or your neighbourhood to continue clocking your steps. 

Work

Unless you are in healthcare, F&B or essential services that require your physical presence at the workplace, most of us will be working from home. If not, some companies have implemented a staggered working schedule for staff to work in the office at different timing of the day or different days of the week. 

How is Singapore Commercial Property Market coping during Covid-19 crisis? 

See how apparent we have developed new shopping habits during the Circuit Breaker? There is an obvious drop in foot traffic in shopping malls. 

The retail scene is worsened with travel bans. According to Singapore Tourism Board’s statistics, Visitors arrival to Singapore as at March 2020 was at 239.9k (YoY -84.7% drop!). 

Certain sectors would be the hardest hit. Severe direct impact on tourism, oil & gas, MICE, retail, food & beverage sectors. 

Retailers that do not evolve and are not able to adapt will struggle and eventually disappear. This is evidenced from global brands such as American clothing brand J. Crew and California-based jeans maker True Religion Apparel. Both retailers have filed for bankruptcy protection recently. British fashion chains Oasis and Warehouse will also close all their outlets. Even one of my favourite retail brand, Cath Kidston have shut down all its 60 shops in Britain just to keep its online and franchise operations running. 

It’s quite evident that Commercial Property Market is currently bearing the brunt of the Covid-19 with a notably higher risk. Impacted commercial tenants face a higher probability of rental default or even business closure. 

Let’s take a look at 1st Quarter 2020 Real estate statistics. I have summarised the key statistics based on URA data.

Retail Space Statistics 2020 Q1 at a glance

Both Retail Prices and Rental have decreased on a quarter-to-quarter comparison. 

Commercial Tenants and Retailers

Due to Coronavirus, Great Singapore Sale is cancelled this year.  Although demand for retail space will still exist, retailers will be more cautious amid economic uncertainty.  Retailers with multiple stores might opt to consolidate their stores.  

   

Consumers preferences are changing.  Singapore retailers have to keep up with the consumers’ trend and create new retail experiences.  They also need to keep pace with the technology progression and e-commerce development in order to survive.      

I reckon demand for retail space will be subdued which will correspond with the reduced Retail pipeline supply.

Commercial Landlords

Industry research team observed that the rental decline is highest in the fringe areas among all the regions.

In order to maintain healthy occupancy rates for their malls or retail space, Commercial landlords might feel pressurised to lower rents.

To keep the local retail scene vibrant, let us continue to support our local retailers as much as possible. 

In our next blog, let us continue to take a look at another area of Singapore's Commercial Property Market - Office Space.  How is Singapore Office Space Market coping amid the Cornavirus outbreak?   

Do look out for Part 3 of Your Essential COVID-19 Singapore Property Guide.  Thank you for reading my blog post.

📬Let's chat about property.  Whatsapp Karen Woo @ 9159 2692 for an non-obligatory chat.