Singapore has too many shopping malls in an age of rising e-commerce, and the changing nature of employment is threatening the office space market. So far, the only property segment that has not been "disrupted" is residential, says investment group CLSA. In fact, the rise of room-rental booking site Airbnb has "dislocated value away from hotel assets towards residential assets", noted CLSA head of Singapore research Jonathan Galligan.
"Airbnb is a very good example of how disruption is dislocating asset values," he said, because when hotel room rates get displaced by short-term rents, hotel and residential yields change.
While CLSA expects a regulated short-stay market here to have very little impact on the residential property market, it believes Airbnb and Airbnb-like websites pose a clear threat to hotels and hotel owners.
CLSA analyst Yew Kiang Wong wrote in a report last month: "The high supply of hotel rooms in recent years has effectively capped hotel operators' pricing power, with new entrants engaging in heavy discounting to grab market share and awareness. We believe Airbnb's impact on the Singapore hotel sector is likely to be the most significant in the coming years."
For now, the grimmer force that property players must reckon with is e-commerce. E-commerce growth has outpaced retail sales since 2012, wrote CLSA analyst Tan Xuan. Last year, e-commerce sales here surged 24.3 per cent from 2014, up from 12.5 per cent growth in 2014 over 2013. In contrast, total retail sales growth slowed to just 2.8 per cent last year, from 3.4 per cent in 2014. "With the downward pressure on rents, we expect at least two to three smaller malls to go out of business over the next five years, most likely in the city fringe area," Ms Tan wrote.
Right now, most landlords are trying to adapt by adjusting their tenant mix to include more food and beverage operators.
But tenant remixing is not a way out, said Ms Tan, as it does not change the fact that e-commerce also directs retail dollars overseas. Besides, F&B margins are not untouched by the labour crunch.
As retailers are forced to focus on omni-channel concepts that reduce the need for stores and direct more sales online, leverage will shift away from landlords towards retailers, she said.