Singapore REITs (S-REITs) with exposure to local malls within their portfolios could see low single-digit percentage y-o-y growth in net property income (NPI) in FY2025, says Bloomberg Intelligence analyst Ken Foong.
Foong’s report dated March 12 comes after the Department of Statistics Singapore (SingStat) posted a strong set of retail numbers for the month of January on March 5. In January, the retail sales index excluding vehicles expanded by 4.8% y-o-y, reversing from December 2024’s 4% contraction. This was partly due to the timing of the Lunar New Year in January 2025 while the New Year festivities took place in February last year.
Foong also believes Lady Gaga’s four shows this May could boost tourist spending and retail sales, as he notes the 2.1% growth in retail sales when singer-songwriter Taylor Swift came to Singapore for six shows last March. This time, Lady Gaga will be performing at the National Stadium, her only stop in Asia, from May 18 to 24.
Other factors such as the opening of Rainforest Wild Asia in Mandai in March, the start of the Disney cruise in December, an economic recovery, resilient employment rates and household income, could also boost retail sales throughout the year despite the high cost of living. Interest-rate cuts and government handouts will also help, Foong adds.
In FY2025, S-REITs may see better DPUs due to expected rate cuts although specific REITs such as CapitaLand Integrated Commercial Trust (CICT) may see its DPU aided by the purchase of the 50% stake in ION Orchard.
Similarly, Mapletree Pan Asia Commercial Trust (MPACT) may see growth in its DPU after an asset sale that will help to reduce debt and its interest expense.
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On the flip side, Foong believes Suntec REIT could be impacted by weaker performances from its overseas assets.
Within the same report, Foong believes the lack of new retail supply in 2025 to 2027 could support retail rents and occupancy, representing another plus for retail S-REITs.
“An average 315,833 sq ft of new retail supply is expected to come to market each year, implying 0.5% average annual growth. This trails previous growth rates of 1% in 2014 - 2019 and 1.5% during 2011 - 2019,” he writes.
“Major projects in 2025 include phase two of Punggol Digital District, with 109,300 sq ft of net leasable area, CanningHill Square with 96,900 sq ft and The Cathay with 81,800 sq ft. Lentor Modern Mall with 90,000 sq ft of NLA is expected to open in 2026, while Bukit V with 173,400 sq ft is slated for 2027. These spaces could fill quickly as most of them will have mixed-use and suburban appeal, and are located in close proximity to residential catchment areas,” he adds.
At the same time, the analyst believes mall occupancies could remain high while rental revenue is likely to increase slightly in 2025 thanks to a “mild rise” in tenants’ sales.
Occupancies for downtown malls are likely to remain high as seen in the high occupancy within the malls along Orchard Road.
Suburban malls are also likely to see stable occupancy rates thanks to residential catchment areas, as seen in the slight decline in Frasers Centrepoint Trust ’s (FCT) occupancy during the Covid-19 pandemic, but followed by a quick rebound.
That said, FCT may see the biggest and most direct impact from the Singapore-Johor Bahru rapid transit system (RTS) when it opens at the end of 2026.
“Residents of the area could choose to spend more in Johor due to quicker travel time to that city, where prices are lower. It might take some time for Causeway Point -- which is nearby and accounted for 28% of FY2024's NPI – to reach a new equilibrium in tenant sales,” says Foong.
Other retail-exposed REITs such as CICT, Suntec REIT and MPACT may see lesser impact due to their malls’ locations and diversified portfolios, he adds.
“Suntec City Mall may continue to attract office crowds and tourists due to its city-fringe location and nearby hotels; VivoCity could draw tourists who visit Sentosa. Both are far from the rail link,” Foong concludes.
