Frasers Centrepoint Trust’s Annual Report: 3 Singapore Retail Trends Investors Should Know

Frasers Centrepoint Trust  (SGX: J69U) released its annual report two weeks ago.

The real estate investment trust’s portfolio contains six sub-urban shopping malls that are all located in Singapore. It also holds a 31.2% stake in the Malaysia-listed Hektar Real Estate Investment Trust.

As part of the annual report, Frasers Centrepoint Trust had engaged property consultant Edmund Tie and Company to describe its business environment. Here are three retail industry trends in Singapore that the report shared:

1. A strong Singapore dollar

The report noted:

“On the back of the strong Singapore Dollar, more residents spent overseas.

Catalysed by the strong Singapore Dollar and growth of budget airlines, residents’ expenditure abroad grew by 2.0% in 2015, up from 0.5% in 2014. This came alongside an increase in outbound departure of Singapore residents from 8.9 million in 2014 to 9.1 million in 2015.”

Residents in Singapore are not confined to just shopping domestically. As the Singapore dollar becomes stronger, it could have some impact on the local retail market. One, Singaporeans might decide to travel overseas to do their shopping. Two, there might be less tourists arriving due to the higher cost of travelling to and spending in Singapore.

2. Online shopping

The next trend is the continued rise in online shopping:

“With wider adoption of e/m-commerce, consumers are becoming more receptive to online purchases.

According to MasterCard (NYSE: MA) in September 2015, $303.5 million was spent online by Singapore cardholders during the Great Singapore Sale (GSS) 2015, a growth of 5.6% while e-commerce transactions increased faster by 9.8%.

VisaNet highlighted that 20% of its e-commerce transactions in Singapore were crossborder transactions, with top corridors being the US and UK. Strong purchasing power makes online purchase overseas more affordable.”

The statistics above showed how online shopping is growing and how Singapore dollars might be flowing overseas in search of better bargains and a wider variety of products.

3. A fighting chance

But, the report also noted:

“Notwithstanding, with the availability of well-located malls, as well as both landlords and retailers constantly innovating their concepts to be more experiential, majority of shoppers prefer to spend in-store, as shopping is often regarded as leisure activity.”

There is still a fighting chance for local malls in Singapore. But, change is needed. In particular, Singapore’s malls have to become more than a place that someone goes to in order to buy a product. Malls have to deliver something experiential, rather than be just another place to shop.

Note: Three more retail trends discussed in Frasers Centrepoint Trust's latest annual report has since been published. You can find them here.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of Mastercard. Motley Fool Singapore contributor Chin Hui Leong owns units in Frasers Centrepoint Trust and Mastercard.