Singapore’s small and highly open economy won’t escape the combined weight of the Ukraine war, supply-chain snarls, China’s Covid-19 lockdowns and a pickup in global inflation. But institutional landlords in the Asian city-state have reasons to be optimistic. Even if gross domestic product grows this year at the lower end of the 3% to 5% official forecast, real estate investment trusts may still get enough juice out of the post-pandemic reopening to keep investors happy amid rising interest rates.
To see what’s making them tick, consider Frasers Centrepoint Trust, a large owner of retail space across the island. By March, its properties were reporting footfall at just about 67% of the pre-pandemic average, but tenants’ sales were at 105% of the 2019 level. As people previously working from home resume a steady office-going routine, cash registers are starting to ring more often on weekday evenings, and landlords are jacking up rents. According to Frasers’ last quarterly presentation, incoming leases are pricier than the outgoing ones in all its malls except one.
As Credit Suisse Group AG analyst Soekching Kum notes in a recent report, Singapore’s retail recovery from Covid-19-related disruption isn’t fully priced in. For one thing, the city-state’s famous Changi airport is making an all-out attempt to woo customers as Singapore pursues the most liberal policies for visitors in Southeast Asia. International travel has picked up to 50% of pre-pandemic levels. The effects of that should show up in shopping by foreign tourists in the second half of this year.