A 2.5 per cent dip in shopper traffic at Paragon mall on Orchard Road need not worry investors, advises brokerage firm DBS Vickers Securities.
It describes last year’s decline by half a million to 18.3 million as “mild”, with the property continuing to be one of the few malls of choice on Orchard Road because of its prestigious tenant mix.
Retail real-estate investment trust SPH REIT‘s latest full-year gross revenue was up S$4.5 million (US$3.2 million), or 2.2 per cent, to $209.6 million on the back of 2.5 and 0.8 per cent revenue increases at Paragon and Clementi Mall, to $170.3 million and $39.3 million respectively.
Property expenses of $48.7 million were down 1.6 per cent on the previous year, mainly because of savings in utilities, and lower advertising, promotion and maintenance expenses.
Both malls performed better than last year, by $4.7m (3.6 per cent) for Paragon and $0.6m (2.3 per cent) for Clementi. Full-year rental reversion of 5.4 per cent was achieved at the portfolio level, with Paragon at 5.2 and Clementi at 7.8 per cent. Occupancy cost was 19.6 per cent for Paragon and 14.8 per cent for Clementi Mall.
Despite the slight dip in shopper traffic, DBS Vickers Securities noted that tenant sales were actually up by $2 million (0.3 per cent) to $661 million.
More importantly, the new link bridge connecting Paragon to the Cairnhill redevelopment should draw more traffic to the mall going forward, says the company.
It believes the opening of the first Apple Store at neighbouring Knightsbridge Mall may also be generating shopper traffic for Paragon.