Heat map: Increasing working population to support new malls
6 major upcoming malls are located in high-growth residential areas.
According to DBS Group, 55% of new supply is expected to be in the suburban area which are expected to be supported by increase number of
residents and working poulation. DBS notes that suburban rents may increase by 2-3% next year, supportedby healthy pre-commitments.
Here's more from DBS:
Supply in the next two years will swing towards the suburbanareas. We estimate that 5.0 msf of retail space is expected to becompleted between
4Q12 and 2016. Of that, 56% or 2.7 msf islocated in the Outside Central Region, while 17% and 13% willbe located in the City Fringe and Downtown areas,
respectively.The remaining 9% and 5%will be at Orchard and Rest of CentralArea, respectively
In OCR, about 75%of the supply, expected to enter the market over the next fouryears, will come from six projects which are mainly located in (i)Jurong Gateway,
which is the upcoming regional hub, (ii) Bedok,a mature residential estate (iii) Sengkang and Punggol, which arehigh-growth residential areas .
More importantly, these malls aregenerally near the MRT stations and would usually attract goodleasing interest. They are owned by experienced and wellestablished
landlords who have large tenant bases. Theremaining 20% are small neighborhood malls or smallersupporting retail facilities for larger developments.
In addition, these malls are located inhighly populated area or fast growing population planning areas.Bedok Mall is located in the Bedok Planning area which is the
most populated with 295, 000 Singapore residents. Censusinformation from 2000 to 2012 showed that Sengkang (+116,500), Punggol (+ 74,700) and Jurong West (+67,150) weresome of the highest resident population growth areas.
New malls will be supported by increase number of residents andworking population. We believe that the strong populationtrends for these areas should continue
with the growing numberof new housing in these estates. In particular, we note thatbetween 2009 and 2010 >20,000 BTO flats were launched forsale at Punggol
and Sengkang and are expected to be completedsoon. URA data also showed that about 2,200 and 10,000private homes are expected to be completed in
Jurong East/ Westand thePunggol/Sengkang area over the next three to five years.
As for Bedok, it is a one of the most matured neighbourhood,yet there is only one fully-enclosed and air-conditionedneighbourhood mall - Bedok Point, which opened
in Dec 2010. Ithas recorded 100% occupancy. Supply is expected to betransient. There is no new major commercial land supply in thesuburban area since 2H11.
Hence, retailers who want to havetheir presence in those growth areas would likely have to explore leasing opportunities in those upcoming malls. Therefore, thetake-up for these malls should remain healthy at92% and93%
Evidently, pre-commitment for newsuburban malls being completed in the next 12 months appearsto be on track as landlords of mega shopping malls tend to
commence marketing well ahead of the completion of theirdevelopments.
Those that have been completed recently including JCube andChangi City Point, have achieved close to 100% occupancy.
Meanwhile, the two large suburban malls - Westgate and Jemthat are expected to open by end of 2013, have achieved 50%and >90% pre-commitment respectively.
We believe this a goodindication of strong leasing demand in the suburban area asJurong Gateway has the highest concentration of new malls.
Thisshould do well to allay any supply overhang concerns. As such,occupancy should continue to stay above 95% next year andrent should grow by 2-3%,
