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More malls undergo revamps amid competitive retail landscape

Analysts say the number of malls undergoing a facelift has almost doubled in the last five years.

SINGAPORE: Amid a more competitive retail landscape in Singapore, more shopping malls have been undergoing asset enhancements. According to property analysts, the number of such initiatives has nearly doubled in the last five years, with landlords and mall developers expected to continue with improvement works to their retail properties in order to attract more shoppers and retain tenants.

One of the many shopping malls that have undergone enhancement works to cater to changing consumer needs is Plaza Singapura, which boasts a swanky new look after getting a facelift a few years ago.

Mr Chua Yang Liang, Head of Research for Southeast Asia at JLL points to a more savvy and well-travelled new breed of consumers who crave almost instant gratification as the reason malls need to be constantly upgraded: "Malls continuously have to revamp themselves to continue to bring these shoppers back and entice them to stay longer. If you remain the same, these shoppers are likely to move somewhere else for new experiences."

According to JLL, enhancement works for developments like Shaw Centre, Orchard Hotel, Marina Square, Suntec City and Eastpoint will be completed this year, while upgrades to Tangs and Robinson Tower will be done soon after.

SLP International Property Consultants says there were about 5 to 7 asset enhancement initiatives each year from 2010 to 2014, an increase from the 3 to 5 per year before the global financial crisis. Analysts say the increasing number of new malls and rising competition have pushed landlords to revamp their retail properties.

Mr Desmond Lim, Head at CBRE Research Singapore explained: "What we have seen over the last few quarters would be fast fashion demanding for duplex spaces. An Asset Enhancement Initiative (AEI) gives you the opportunity to make yourself more flexible to cater to new tenants. AEI also creates better internal efficiency. In terms of building maintenance, building management cost can be reduced through AEI as well."

Mr Nicholas Mak, Executive Director of Research and Consultancy at SLP International Property Consultants added: "There's also an increase in the number of acquisitions by retail REITS. Usually, retail REITs may consider doing an AEI within the first three years after they acquire a mall. Typically after an AEI exercise, some landlords may increase rents anywhere from about 10 per cent to as much as 50 per cent in some cases."

SLP adds that the return on investment on AEI works can range from 8 to 22 per cent. With bigger and shinier malls coming up, analysts say landlords may have to keep changing in order to keep up. 

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