SINGAPORE (Nikkei Markets) -- Owners of Singapore shopping malls raised rents marginally in the third quarter as tenant increased their sales and vacancies stayed low, indicating a relatively healthy retail sector despite competition from online players.
However, costs also rose eroding profits for some real estate investment trusts.
CapitaLand Mall Trust, Singapore's largest retail landlord, Thursday raised its distribution per unit, or dividend, by 5% for the third quarter after its net property income grew 1.1%. Although shopper traffic at its malls fell 1.8% from a year ago, tenant sales edged up by 0.5%.
CMT, whose 15 properties include landmarks such as Plaza Singapura along Orchard Road, a major shopping area, and Raffles City in the Civic District, said it managed to raise rents on expiring leases by 0.6% so far this year while occupancy at its malls stood at a high 98.5%.
Over at VivoCity, Singapore's largest mall owned by Mapletree Commercial Trust, tenant sales increased 2.8% during the quarter while occupancy stood at 99.9%.
MCT, which also owns offices, said it raised rents by 4.1% while renewing leases at its retail properties but did not provide a specific figure for VivoCity.
MCT said the medium-term rental outlook for its retail properties was positive, despite the tight labor market that has affected retailers and the strong Singapore dollar, which could impact tourism.
New entrants and expansion by existing retailers continued to drive leasing activity in the third quarter, the REIT said in a statement on Wednesday, citing real estate services firm CBRE.
Singapore's retail sector has held up better than expected even as online shopping sites have proliferated, thanks to stronger economic growth over the past two years and rising visitor arrivals.
According to Singapore Tourism Board data, the city-state of 5.6 million people attracted 12.6 million overseas visitors between January and August, an increase of 7.5% over the same period a year ago.
CBRE said last week that retail rents rose for a third straight quarter in the July to September period, helped by strong demand from sporting goods retailers and food and beverage operators as well as a lack of new retail space coming onto the market. Rents in the prime Orchard Road shopping district rose at a faster pace than in the suburbs due to the growth in tourism.
Activity-based tenants such as gyms, arcades and cooking studios also expanded during the quarter as landlords tried to have greater diversity in their malls to increase customer traffic, CBRE added.
Still, higher costs eroded profits for some REITS.
Fraser Centrepoint Trust, which owns six suburban malls, said Wednesday net property income fell 4.9% in the three months to September despite a slight increase in revenue. The trust blamed higher repair and maintenance expenses as well as an increase in utility charges.
FCT said rents increased by an average of 0.2% on renewal during the quarter, while tenant sales rose 3.6% from a year ago.
Suntec Real Estate Investment Trust reported a 0.3% increase in distribution per unit for the quarter as it paid out proceeds from an earlier divestment. However, net property income from Suntec City Mall declined due to higher costs despite an increase in revenue.
Suntec City Mall had an occupancy rate of 98.5% during the quarter, while tenant sales for the first nine months of the year were up 5.4%.
--Kevin Lim
