-
IP addresses are NOT logged in this forum so there's no point asking. Please note that this forum is full of homophobes, racists, lunatics, schizophrenics & absolute nut jobs with a smattering of geniuses, Chinese chauvinists, Moderate Muslims and last but not least a couple of "know-it-alls" constantly sprouting their dubious wisdom. If you believe that content generated by unsavory characters might cause you offense PLEASE LEAVE NOW! Sammyboy Admin and Staff are not responsible for your hurt feelings should you choose to read any of the content here. The OTHER forum is HERE so please stop asking.
REIT sounds the death knell...
- Thread starter zhihau
- Start date
REITs killed small businesses
Are Singapore REITs killing our businesses?
https://www.icompareloan.com/resources/reits-high-business-cost-kill/
REITS and high business cost are intricately linked, this is real. Just ask the many retail shop operators or food court stalls owners who suffer under one of the few major REITs operator, they will tell you. REITs are pushing the cost of shopper experience to the shop operators and mandating renovation to their specifications at the shop operator’s cost. REITs not only charge rentals, they also charge a percentage of sales on the revenue.
Are Singapore REITs killing our businesses?
https://www.icompareloan.com/resources/reits-high-business-cost-kill/
REITS and high business cost are intricately linked, this is real. Just ask the many retail shop operators or food court stalls owners who suffer under one of the few major REITs operator, they will tell you. REITs are pushing the cost of shopper experience to the shop operators and mandating renovation to their specifications at the shop operator’s cost. REITs not only charge rentals, they also charge a percentage of sales on the revenue.
Are Singapore REITs killing our businesses?
BY RYAN ONG • JANUARY 8, 2018 • BUYING A PROPERTY, COMMERCIAL PROPERTY LOAN, REITS • COMMENTS (0) • 1395
REITS and high business cost are intricately linked, this is real. Just ask the many retail shop operators or food court stalls owners who suffer under one of the few major REITs operator, they will tell you. REITs are pushing the cost of shopper experience to the shop operators and mandating renovation to their specifications at the shop operator’s cost. REITs not only charge rentals, they also charge a percentage of sales on the revenue.
REITS leads to high cost of living, as your food court stalls are now charging $6, $8 and perhaps even $10 compared to $4, $5 and $6 in the past. They have no choice.
And we thought landlords bullying farmers were bad in the past, fast forward 2000 years, the same is still happening. Landlords bullying shop/stall operators.
It’s no secret that Singapore’s retail scene is dying, and that Orchard Road is showing symptoms of fatigue. Last year, Orchard Road malls saw record-high vacancy rates, at one point hitting 8.8 per cent. Amid all the hoo-ha about ecommerce and poor differentiation (because we all know there are so many ways to make shopping malls different), was a comment about Singapore REITs. While S-REITs have long been a favourite among investors, we may be closing an eye as to whether they’re hurting local businesses:
Are rental rates too high for Singapore’s businesses?
Not long ago in 2014, retail rents in Singapore were the seventh most expensive in Asia. Prices have come down since then, but only in a series of slight dips. Average rent for spaces in the city centre are now around $30 per square foot (per month), and around $35 per square foot on Orchard Road.
Perhaps property buyers may want to consider buying their own commercial or industrial properties instead of renting one. Here is to analyse whether to buy or rent a commercial property. at least they are going to be more in control of the situation and be the landlords themselves. Best perhaps are shophouses.
Think about that for a minute: a typical 500 square foot shop – something big enough to be a boutique or hair salon – could run up a price of $15,000 per month. Along with operating costs like staff, inventory, insurance, and others, this leaves most retail outlets struggling to break even. If you’re not convinced their struggling (despite some parts of Orchard looking like a ghost town), here’s a scary statistic for you: we had 8,680 retail closures last year, up from 4,557 in 2010. That’s a whopping 52.5 per cent increase.
Now not all of that can be attributed to rent of course; ecommerce is gradually murdering brick and mortar businesses. But it does raise the question of whether rental rates can continue being as high as REITs set, given that these stores are already on the verge of closure.
This is not a new situation
As far back as 2014, the Workers Party raised the issue of REITs during a Parliamentary session. It was met with insistence that REITs are not responsible, on the basis that REITs only accounted for 20 per cent of our malls (at the time). The Ministry for Trade and Industry (MTI) also remarked that it found little discrepancy in rental rates, between REIT owned malls and single owner malls.
But that still leaves a big question. Even if the rental rates at single-owner malls are not too far off from REITs, why are rental rates so high in general? REITs may not own the majority of malls in Singapore, but they do own the major malls, which are the trend-setters when it comes to rental rates. And REITs have inclination to push for higher rentals all the time, as they have a bunch of shareholders to answer to. It’s entirely possible that single-owner
malls follow in the wake, matching their rental rates to what the REIT owned malls set.
The irony is that REITs may be killing retail, without intending to
REITs have always seen themselves as being champions of retail, so they get quite defensive when they’re accused of killing it. REITs will point out that they undertake significant marketing spend to promote malls, and launch constant Asset Enhancement Initiatives (AEI). And to their credit, you really can see the difference between a REIT owned mall, and one of the old strata-titled malls.
In a strata-titled mall, for instance, every owner only cares about their own space. It’s hard to round everyone up for mall-wide initiatives, like New Year sales, or even putting up Christmas decorations. Each owner wants to spend for their own shop, not for the “greater good” of the mall. REITs, however, run the mall as a whole; that’s why you can see the difference between, say, Clementi Mall, and some other run-down malls that we don’t want to point fingers at (but you know the type, with only three KTVs and a run down bar).
And REITs, for the most part, have no ill intentions toward their tenants (why would they? It’s how they make their money). But the very way a Singapore REIT is structured might be causing the problem.
BY RYAN ONG • JANUARY 8, 2018 • BUYING A PROPERTY, COMMERCIAL PROPERTY LOAN, REITS • COMMENTS (0) • 1395
REITS and high business cost are intricately linked, this is real. Just ask the many retail shop operators or food court stalls owners who suffer under one of the few major REITs operator, they will tell you. REITs are pushing the cost of shopper experience to the shop operators and mandating renovation to their specifications at the shop operator’s cost. REITs not only charge rentals, they also charge a percentage of sales on the revenue.
REITS leads to high cost of living, as your food court stalls are now charging $6, $8 and perhaps even $10 compared to $4, $5 and $6 in the past. They have no choice.
And we thought landlords bullying farmers were bad in the past, fast forward 2000 years, the same is still happening. Landlords bullying shop/stall operators.
It’s no secret that Singapore’s retail scene is dying, and that Orchard Road is showing symptoms of fatigue. Last year, Orchard Road malls saw record-high vacancy rates, at one point hitting 8.8 per cent. Amid all the hoo-ha about ecommerce and poor differentiation (because we all know there are so many ways to make shopping malls different), was a comment about Singapore REITs. While S-REITs have long been a favourite among investors, we may be closing an eye as to whether they’re hurting local businesses:
Are rental rates too high for Singapore’s businesses?
Not long ago in 2014, retail rents in Singapore were the seventh most expensive in Asia. Prices have come down since then, but only in a series of slight dips. Average rent for spaces in the city centre are now around $30 per square foot (per month), and around $35 per square foot on Orchard Road.
Perhaps property buyers may want to consider buying their own commercial or industrial properties instead of renting one. Here is to analyse whether to buy or rent a commercial property. at least they are going to be more in control of the situation and be the landlords themselves. Best perhaps are shophouses.
Think about that for a minute: a typical 500 square foot shop – something big enough to be a boutique or hair salon – could run up a price of $15,000 per month. Along with operating costs like staff, inventory, insurance, and others, this leaves most retail outlets struggling to break even. If you’re not convinced their struggling (despite some parts of Orchard looking like a ghost town), here’s a scary statistic for you: we had 8,680 retail closures last year, up from 4,557 in 2010. That’s a whopping 52.5 per cent increase.
Now not all of that can be attributed to rent of course; ecommerce is gradually murdering brick and mortar businesses. But it does raise the question of whether rental rates can continue being as high as REITs set, given that these stores are already on the verge of closure.
This is not a new situation
As far back as 2014, the Workers Party raised the issue of REITs during a Parliamentary session. It was met with insistence that REITs are not responsible, on the basis that REITs only accounted for 20 per cent of our malls (at the time). The Ministry for Trade and Industry (MTI) also remarked that it found little discrepancy in rental rates, between REIT owned malls and single owner malls.
But that still leaves a big question. Even if the rental rates at single-owner malls are not too far off from REITs, why are rental rates so high in general? REITs may not own the majority of malls in Singapore, but they do own the major malls, which are the trend-setters when it comes to rental rates. And REITs have inclination to push for higher rentals all the time, as they have a bunch of shareholders to answer to. It’s entirely possible that single-owner
malls follow in the wake, matching their rental rates to what the REIT owned malls set.
The irony is that REITs may be killing retail, without intending to
REITs have always seen themselves as being champions of retail, so they get quite defensive when they’re accused of killing it. REITs will point out that they undertake significant marketing spend to promote malls, and launch constant Asset Enhancement Initiatives (AEI). And to their credit, you really can see the difference between a REIT owned mall, and one of the old strata-titled malls.
In a strata-titled mall, for instance, every owner only cares about their own space. It’s hard to round everyone up for mall-wide initiatives, like New Year sales, or even putting up Christmas decorations. Each owner wants to spend for their own shop, not for the “greater good” of the mall. REITs, however, run the mall as a whole; that’s why you can see the difference between, say, Clementi Mall, and some other run-down malls that we don’t want to point fingers at (but you know the type, with only three KTVs and a run down bar).
And REITs, for the most part, have no ill intentions toward their tenants (why would they? It’s how they make their money). But the very way a Singapore REIT is structured might be causing the problem.
.
Moral of The Story ?
Support Amazon Prime, if priority, buy whatever we can buy from Prime.
They liberalized our retail scene.
Many shopping malls are mostly controlled by Capitaland's Reits and even AMK Hub and Nex are controlled by NTUC.
reits have one of the best dividends among the equities.
Donch worry. When GST increase, more will close shop. Sinkies can then all go to drive Uber and Grab. Altogether Huat arh!
Altogether now!!! HUAT AH!!!
Similar threads
