- POSTED: 23 Jul 2014 09:41
- UPDATED: 23 Jul 2014 23:24
However, CapitaMall tenant sales per square foot fell 3.7 per cent year-on-year, while shopper traffic declined 2 per cent.
SINGAPORE: CapitaMall Trust, Singapore’s largest shopping mall landlord, reported higher distributable income for the second quarter even as its tenants suffered poorer sales during the period.
The property trust, which is managed by Southeast Asia’s biggest developer CapitaLand, said its distributable income for the April to June period rose 6.5 per cent to S$93.4 million, helped by higher rents and occupancy levels.
But it also said in its detailed earnings statement that tenant sales per square foot decreased by 3.7 per cent year-on-year, while shopper traffic decreased by 2 per cent year-on-year.
CapitaMall Trust said there is some "retail tension" within Singapore caused by macroeconomic factors like softer tourist arrivals and interest rates uncertainty, as well as the impact from policy-driven measures such as a tighter supply of foreign workers, rising wages and a stronger Singapore dollar.
Sales of music and video rose 13.1 per cent during the quarter, while sales of gift and souvenirs rose 13 per cent. Sales of IT and telecommunication products fell the most, declining by 17.2 per cent and 23.1 per cent, respectively.
CENTRAL DISH-WASHING FACILITY
To address the issue of labour shortage, CapitaMall Trust plans to set up a central new dish-washing facility catering to F&B tenants in the western part of Singapore.
“We recognise that many of the F&B outlets have difficulties finding dish washers and what we have done is we've gone out to look at a central dish washing facility at IMM itself,” said Wilson Tan, CEO of CapitaMall Trust.
He said the F&B outlets just need to send their plates and utensils to the facility, where a contractor will wash and clean the utensils before sending them back. Details about the central dish washing facility is expected to be announced at a later date.
CapitaMall Trust is also upgrading its malls to stay competitive and Bukit Panjang Plaza (BPP) will soon undergo an S$18.5-million makeover.
The asset enhancement works will involve creating a new two-storey F&B block on level two, where the existing roof garden is located, and relocating the present roof garden to level four next to an expanded public library and a new childcare centre.
The asset enhancement works should be completed by the third quarter of 2016. CMT said the projected return on investment is eight per cent.
“We need to go out and refresh, go out and make the place look good… because there's another competitor that's coming out barely 120 metres away. They will be coming on stream late 2015/2016 and if we again do not remain relevant and find our own niche that's where we have a challenge," said Mr Tan.
APPEAL TO YOUNG ENTREPRENEURS
Meanwhile, CapitaMall Trust said the new retail zone J.Avenue at JCube is expected to open from September. About two-thirds of the 70 shops there have been taken up.
Mr Tan said: "In the second half of 2013, within 120 and 180 metres away there were two malls Jem and Westgate, which belong to CMT as well, 30% of it.
“If you look at the proximity and what the two new malls can offer, clearly JCube, being a smaller mall, would find it very difficult to compete with them. Therefore, there is a need for us to reconfigure and reposition JCube."
He added that J.Avenue will appeal to young entrepreneurs who may prefer shorter term leases at three to six months.
While there may be challenges for the retail sector, CapitaMall Trust said there is sufficient catalyst in the Singapore economy and the high employment rate here will continue to support the retail industry.
In the second quarter ended June 30, CapitaMall Trust posted a 6.3 per cent on-year increase in distribution per unit to 2.69 cents. Gross revenue climbed 2.5 per cent to S$164.3 million during the quarter. Net property income came in at S$114 million in the second quarter, up 4.4 per cent compared to the previous year.
Malls managed by CapitaMall Trust include Tampines Mall, Junction 8, Bugis Junction, Raffles City and Plaza Singapura.