Will the Completion of the RTS Link Impact the Retail Market in Northern Singapore?
Retail rents in Singapore have continued to steadily rise in the first quarter, according to local consultants. CBRE reports that the prime retail rental market on Orchard Road increased by 1.1% quarter-over-quarter, while suburban prime retail rents saw a modest rise of 0.3% in the same period. Similarly, Savills' basket of malls indicates that the average monthly rent in Orchard climbed by 0.7% quarter-over-quarter, although retail rents in other areas remained stable.
Mall operators are also seeing benefits from stronger retail sales. Data from the Department of Statistics of Singapore shows that the Total Retail Sales Index, excluding motor vehicles, rose by 9.4% year-on-year. Additionally, total food and beverage sales reported a significant 14.7% increase year-on-year.
However, the long-term outlook presents potential challenges. There's a looming shift in spending as the residential population in Singapore may increasingly patronise retail outlets in Johor Bahru, particularly with the RTS Link expected to be operational by the end of 2026.
With the Singapore dollar maintaining its strength against the Malaysian Ringgit, many Singaporeans are opting for day trips to Malaysia for shopping, attracted by the lower prices. This trend could significantly impact local retail markets in Northern Singapore. (See Impact on Retail Markets in Johor Bahru and Singapore - PropertyGuru For Business ).
Exploring the Potential Impact of the RTS Link: A Case Study of Causeway Point
As the largest mall in Woodlands, Causeway Point serves as an integral part of the Woodlands Regional Centre. Conveniently located at the nexus of Woodlands Regional Bus Interchange and Woodlands MRT station—an interchange station for the North-South and Thomson-East Coast lines—Causeway Point boasts a net lettable area of 419,688 square feet. Between October 2022 and September 2023, the mall attracted approximately 25.9 million visitors.
Interestingly, despite its proximity to the Causeway and Woodlands Train Checkpoints, Causeway Point has maintained robust performance metrics. As of March 31, 2024, its occupancy rate slightly increased by 0.1 percentage points to 99.7%, compared to December 2023. Moreover, its revenue in the first half of 2024 exceeded that of the same period in 2023.
This case study suggests that the operationalisation of the RTS Link could potentially benefit Causeway Point as well, hinting at a resilient appeal to Singaporean shoppers and a wider network of shoppers in Malaysia to tap into.
Where are the visitors coming from?
Using the mobility data from DataSense by PropertyGuru For Business, the majority of mall visitors at Causeway Point are Singaporeans as anticipated, comprising approximately 98.21% of the sample population. Notably, 47.32% of these visitors hail from District 25 (Admiralty/Woodlands), making it the predominant source of foot traffic. This is followed by 16.85% from the neighbouring District 27 (Sembawang/Yishun).
Source: DataSense by PropertyGuru For Business
Additionally, our findings reveal that a notable portion of visitors also come from Malaysia, extending beyond the immediate customs checkpoints to areas as far as Skudai.
Recalibration of prices of goods and retail rents
While the stronger Singapore dollar is prompting residents to shift their spending to Malaysia, several factors suggest that this may not significantly affect the prices of goods and retail rents in Woodlands. Firstly, certain products exclusive to Singapore remain a compelling reason for local shopping. Additionally, retailers in Johor Bahru might adjust their prices closer to those in Singapore, potentially offsetting the initial lure of lower costs.
Lastly, the introduction of the RTS Link will likely encourage suburban malls to enhance their offerings and overall shopping experience, helping to maintain their competitive edge despite cross-border shopping trends.
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