SINGAPORE (Aug 29): Starhill Global REIT prides itself on owning landmark retail properties on the most prominent stretch of Orchard Road.

But since the global financial crisis, the fortunes of luxury goods and upscale fashion brands that dominate the shopfronts in Singapore’s shopping belt appear to have been especially hard hit.

A slowing economy and growing tendency for shoppers to make their purchases online have been blamed for weak sales at brick-and-mortar stores over the last couple of years.

That is weighing on occupancy rates and rents.

Retail rents in the Core Central Region has fallen, while vacancy rates in the Orchard Road are has also risen. The phenomenon is not limited to Singapore, weak demand for upscale fashion has also hit the REIT in China, where the government has been clamping down on ostentatious consumption.

Nevertheless, SG REIT is managing to keep distribution per unit (DPU) firm enough to draw the interest of some analysts, because of advantageous master leases and active management of its portfolio.

For 4QFY2016, it reported a 3.6% y-o-y rise in revenue to $53.6 million and a marginal 0.3% improvement in Net Property Income to $41.4 million. DPU for the quarter was unchanged at 1.29 cents.

To find out why Starhill REIT has managed to grow despite the retail-sector pressure, grab a copy of The Edge Singapore (Issue 743, week of Aug 22).