How Singapore's retail sales affect SPH REIT

Rent price is driven by rental reversion and retail sales.

SPH REIT's price is strongly correlated to Singapore's retail sales, DBS Group Research said.

According to the brokerage firm, the rental performance of the two properties Paragon and Clementi Mall in the portfolio, predominantly the former, is a good representation of investor’s perception and confidence in the direction of the Singapore retail market.

"Singapore Retail Sales and SPH REIT’s rental reversion rates are in turn strongly correlated with a high coefficient of 0.80 which can be explained by the greater willingness for merchants to renew their tenancies at a higher rent once they observe positive retail momentum in the previous rental cycle," DBS Group Research said.

Meanwhile, the higher correlation coefficient of SPH REIT’s price and STI reaffirms the above finding that SPH REIT is more of a retail proxy than a real estate proxy.

"As such, Singapore retail trend and SPH REIT’s rental reversion are factors that need to be closely monitored," the brokerage firm noted.

On the other hand, it also noted that SPH REIT has no meaningful connection with tourist arrivals.

"Despite the lack of official data, the REIT’s management estimates that approximately 75% of the spending at Paragon is made by local shoppers, whereas overseas shoppers count for less than a quarter," DBS Group Research explained.

Reaching the people who run Asia's businesses is harder than it used to be.

Inboxes are crowded. Attention is short. The executives you most want to reach — the founders, CFOs, and operators who actually move budgets — are the hardest to find through the usual channels. If you're building a company, a category, or a reputation, you already know this.

We've spent twenty years building the room they read. Singapore Business Review is where senior decision makers in Singapore and across Southeast Asia come for business coverage they can't get elsewhere — in print, online, and in person at the summits and roundtables we host across seven markets.

If you have something these readers should know about — a point of view worth publishing, a product worth their attention, an event worth their time — we'd like to hear what you're trying to do.

Book a meeting

| Or download the media kit (PDF)

240,000 senior readers quarterly in print Top 1,700 Singapore companies reached

7 markets across Southeast Asia