Despite a gloomy retail scene, demand for retail space in Singapore actually inched up in 2016 due to new store openings.

Singapore has always marketed itself as a premier shopping haven in Southeast Asia. Lacking in natural attractions, it instead relies on its strategic position as an Asia-Lite version of the region and where English is widely spoken.

This, combined with its conducive business environment, low corporate taxes and its sterling reputation as the hub for wealth management has helped to attract the wealthy to park their money here and to make the Lion City their home.

In 2008, for instance, the Boston Consulting Group puts Singapore as having the highest density of millionaires in the world, with an astounding one in 10 households having an investible asset of US$1 million or more.

As more wealth from the world converged upon this tiny city-state, so did the number of glitzy shopping malls and designer boutiques. Since 2008, a number of high-end shopping centres have blossomed along Orchard Road. They include The ION, Mandarin Gallery and Knightsbridge Mall.

Feeling the heat, the other older, established malls such as Wisma Atria and The Heeren, likewise embarked on a massive renovation and refurbishment to remain somewhat relevant.

Meanwhile, Singapore’s Downtown Core area welcomed the iconic Marina Bay Sands which boasts the world’s largest Louis Vuitton boutique outside its flagship Champs-Elysees store in Paris.

However, Singapore’s ranking has slipped considerably as the property cooling measures took its bite in 2011. Just last year, Knight Frank had placed Singapore in sixth position with the most number of ultra high net worth individuals (UHNWI) population in the world at 2,360 just behind New York (5,600), London (4,905), Hong Kong (3,854), Moscow (3,457) and Los Angeles (2,820).

According to Knight Frank’s The Wealth Report 2016, 16% of UHNWIs will take into consideration a permanent move overseas when migrating their wealth. As this is closely tied to property purchase, this had also impacted the outflow of wealth and by extension, the retail sector.

“Pressure from regulators is for a rules change to reduce or even prohibit demand for property altogether. Inevitably, this will have a dampening effect on demand for these particular schemes,” its report cites using Singapore and the United Kingdom as an example.


Coupled with the weakening economy and a slew of retrenchments that have taken place across the banking and shipping industries, it comes as no surprise that consumers have tightened their belts.

Singapore had narrowly escaped a technical recession in the 4th quarter of last year. Meanwhile, data from the Ministry of Manpower (MOM), showed that in the 4th quarter of 2016, the overall employment continued to soften in terms of jobs and hiring. This has had a spillover impact on the retail sector.

According to the Savills Research & Consultancy, prime monthly rents in the 4th quarter for Orchard Road and suburban areas remained at S$29.90 per sq ft and S$28.00 per sq ft respectively, similar to the previous quarter. However, on a year-on-year basis, both the Orchard Road and suburban areas saw rents falling by 0.1% for the 4th quarter.


The research firm data also showed that retail sales (excluding motor vehicles) slipped 1.0 per cent, 3.5 per cent and 1.0 per cent year-on-year respectively in the last three months of 2016.

Meanwhile, the pace of decline in food & beverage (F&B) segment slowed down to 0.7 per cent year-on-year in October but fell sharper at 3.8 per cent and 4.1 per cent year-on-year in the last two months.

The watches and jewellery sector fared the worst as retail sales slowed down to 5.6 per cent year-on-year in December after plunging 11.3 per cent year-on-year in November.

Priced out by expensive rental and dwindling customers, small-time retailers have chosen to roll down their shutters. However, it is not just the small shops that are throwing in the towel. Other more established players are also beginning to feel the pinch.

Last March, the Al-Futtaim Group, which owns Robinsons, shut down 10 of its stores as part of its business consolidation plans. They included Marks & Spencer at Centrepoint, John Little at Marina Square and Tiong Bahru Plaza as well as several other Royal Sporting House outlets.

This came hot on the heels when it closed Singapore’s oldest department store, John Little in Plaza Singapore in December and vacated two levels at Jurong Point early 2016.

“After evaluating the relevancy and sustainability of the John Little bricks-and-mortar business, Robinsons Group decided to reintroduce the brand in a pop-up concept to be in line with the current global trend for retail business,” cites Savills Research & Consultancy.

Meanwhile, Jay Gee Melwani Group closed down 8 stores which carry the New Look and Celio labels in various malls last year.

“The sales are not there and the costs are too high. We are consolidating and re-strategising which ones can work, which ones can’t,” Jay Gee Melwani Group managing director R Dhinakaran told The Straits Times.


With a bleak economy and an uncertain job market, experts are calling for landlords to be more flexible and to adopt a new rental model.

“Although the economy had been slow moving and job uncertainties linger in the market place, island-wide, demand in 2016 still inched up to 560,000 sq ft. Therefore, despite the gloomy retail scene, demand is actually latent and can easily be tapped if landlords lower rent and/or move towards a Gross Turnover Rent (GTO) model,” cites Savills Research & Consultancy.

The reality, however, is more prosaic as compassionate landlords are far and few between. Instead, they are offering shorter lease terms instead as a stop-gap measure. This has caused retailers to opt for e-commerce instead.

In the latter, retailers are saying that declining sales have not been factored into their rents. This runs contrary to the GTO model.


Despite all the gloom and doom, BHG, has bucked the trend. It took over the two floors and a unit on the third level vacated respectively by John Little and Harvey Norman in Jurong Point. Measuring some 49,000 sq ft, it is now its largest outlet in western Singapore. The new BHG store in Jurong Point also features visuals and merchandising concepts that are constantly refreshed.

There’s more.

In late October, contemporary South Korean fashion brand H:Connect officially opened its first Southeast Asian store at Bugis Junction. Australian swimwear brand Seafolly expanded with its fourth store in November.

Meanwhile, Victoria’s Secret opened its first Southeast Asian flagship store in mid-November, occupying some 12,000 sq ft of retail space at Mandarin Gallery.

“Beneath all the challenges retailers face, the fact is that demand for space is still increasing,” concludes Alan Cheong, Savills Research

In Singapore’s case, a foreigner can be considered for permanent residency (PR) status if he invests at least S$2 million in business set-ups, other investment vehicles such as venture capital funds, foundations or trusts, and/or private residential properties. Of this, S$1 million can be in purchasing a private residential property, subject to foreign ownership restrictions.

However, the Additional Buyer’s Stamp Duty (ABSD), implemented in 2011, has had a significant impact among foreign purchasers as they now have to pay a 15% tax.

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