A ) THE RENTAL
will observe that since beginning of 2015, there have been a
distinct and deteriorating shop vacancy rate all over Singapore.
Those owned and managed by singly-owned developer or the Real
Estate Investment Trust (REITS) may have lesser vacancy rate as
the 'REIT Managers' can revamp and adapt to the tenant mix
according to the change in market demand and lifestyle patterns.
Manager can allocate quota for the actual trade mix, like how many
nails or hair salons or I.T. & electronics shops allowed in
the malls, to shift certain trades to various floors and not to
renew the lease to certain tenants so as stay relevant and
position the malls to have the most comparative advantage in
comparison to other competing malls.
In fact, the
monetary and economic value of retail space and malls is very much
enhanced by management-centric skills to generate cash flow and
capital value. Other important market conditions include the site
location, the catchment hinterland and the demographics of the
shopping centres have the Management Corporation (MCST) to manage
and upkeep the premises. As market correction is going on, the
MCST must play a pro-active role to help the strata-titled
proprietors to maintain and promote the marketing and sales
activities. But many such MCSTs in Singapore are
unable to do so for various reasons such as fund constraint amid
the need to maintain adequate fund to maintain the building or
differing views from different proprietors resulting in difficulty
in arriving at a common decision.
The individual investors can also tap and benefit from the retail
property sector by owning strata-titled lots in shopping areas. As
BE TAKEN BY LANDLORDS:
take pre-emptive steps to balance
up the potential loss scenario by taking temporary measures like:
Try to accommodate the tenant's short
As far as possible, try not
to let the shop
space be empty
as Landlords would still have to pay for the monthly cost for
property tax and maintenance charges ( $400 to $ 1500 a month
depending on the Annual Value and the MCST maintenance charges on
a per sq foot basis based on 300 sq ft shop ).
OF PEOPLE MOST
Over the last
20 years, the rental market have been stable and rent have been
rising consistently. Retirees have enjoyed incremental income to
plan and finance their aspiring lifestyles.
is dropping, while a large sum of money goes to paying the
property tax and the monthly maintenance and service charges. The
Retirees will be greatly affected when the rental income drops,
when tenants defaulted or ask for rental discount when the tenancy
agreement has already been signed and the risk of the shop being
vacant for months.
There is a possibility
that the Retirees' income may
drop when vital decision was not properly made to protect from the
CORRECTION ALSO BRINGS IN NEW TENANTS AND NEW LIFE.
In the past, many aspiring and potential tenants
will put off from renting because of the high rent
revolve around air-conditioned malls and the ambience it provides,
owning a shoplot can
be profitable and desirable investment.
This sector has very limited supply as most new shopping malls are
singly owned and managed by one corporation
or party to enhance and generate cash
build up capital value.
Over the last
30 years, we have seen retail property value gone up by many
folds, with some appreciating more than 10 times or more. In fact,
owning retail property have been good till now.
and what are the reasons for the current
tenants are losing money as sales have dropped because shoppers
are not coming in to the malls. E-commerce, changing life-style
and drop in purchasing power and the loss of the wealth-effect may
have contributed to this deficit.
tenants cannot cover the operating cost
after paying for rental and manpower cost from
clientele and they did not manage to replace with
sufficient fresh walk-in or new
new shopping malls supply and some tenants' inability
to pay rent have resulted in excess shop supply, stubborn vacancy,
and drop in rental rates, especially when the shops remain vacant
market correction, many young entrepreneurs,
coming in to rent at the much reduced rental rates.
cycle of new tenants with new ideas and retailing concepts will
fill up the missing gap on those who leave. If such transformation
is fast and smooth, the shopping malls' ambience and retailing
activities will be lively and refreshing.
B) THE SALES
property sales market has seen few sales made to-date in 2015.
Based on a search on 15th June 2015, the shops transacted in Far
East Plaza, Lucky Plaza and Sim Lim Square is 2, 2, and 2
There are many
of investment for investors and some are
thinking that the sale price will drop further as the rental
market and yields are adjusting downwards to reflect on the
consider factors like the current and potential yields and rental
rates, shop state of the economy and opportunity cost compared
with other investments.
Evaluate the possible
solutions to minimise loss of rental income and rental default.
Discuss with us (the professionals) on how best to respond as
every decision's choice has its pros and cons and some
consequences may be painful and can hurt financially and
Please call us at HP 96736477 for a confidential
discussion on the optimal decision to solve any foreseeable
problems or ask for an estimate of the latest market price for
rent or sale