ong, and it has been able to attract new retailers; more are coming, some of them first to the Singapore market. These include new food and beverage tenants at Clarke Quay, a heritage project of converted shophouses on the Singapore River that is undergoing renovations. The objective is not just to refresh the tenancies and spruce things up a bit, but also to turn the project into an all-day attraction rather than just a night-time one. In Southeast Asia, that means getting the temperatures down, so some of the focus is on devices to improve customer ‘thermal comfort’ and make alfresco dining viable for a longer period during the day. The numbers are compelling While Clarke Quary is getting its facelift, Capitand’s overall company health metrics continued to chug along strongly in the first half over the same six months of last year and are now back above the pre pandemic level. Retail occupancy stands at 98.7 per cent and should edge up even further in the second half. Tenants sales per square foot are up 6.0 per cent year-on-year and shopper traffic up a healthy 17.5 per cent. Leasing spreads — the difference between incoming rent on new versus expiring leases, was +6.9 per cent. Spreads for suburban malls grew by roughly the same percentage as for the trophy downtown projects. However, visitors to the downtown projects are more productive for retailers: each percentage point increase in sales productivity at the suburban malls required a 4 per cent increase in footfall, while for the downtown malls only a 2 per cent increase was required. Fixed minimum rent continues to be by far the dominant source of rental income: the recent hype overpressure on landlords globally to shift to more toward a variable rent structure has turned out to besomewhat overdone. All up, retail accounted for more than 50 per cent of company revenues in the first half. Revenues fromCapitaLand’s dedicated retail assets grew by 3.2 per cent, to S$284.8 million. As can be expected because of the recovery in tourism and return to offices over the past year, the improvements in the company’s mixed-use portfolio was more dramatic: revenues increased 18.5 per cent, to S$232.9 million. The latter, of course has been helped up particularly by the recovery in overseas visitor numbers. The iconic Raffles City is a good example: a mixed-use project with an office tower, five-level shopping mall, convention center and three hotels. Each component drives business for the others, and attracts new retailers to the mall, most recently including Sun and Sands Sports (from Dubai), MCM (originally from Germany, selling bags and small leather goods), Surrey Hills Grocer (an Australia-themed café/grocery store) and Neiwai (from China, women’s underwear and loungewear). Retail tenant sales per square metre increased in most categories, led by leisure and entertainment(22.9 per cent), shoes and bags (22.9 per cent), sporting goods (11.6 per cent), department stores (9.5 per cent), and food and beverage (9.0 per cent). There are a few strugglers, most notably home furnishing (-7.0 per cent) and, interestingly, jewelry and watches (-6.7 per cent). Diversification is more than just a long word In the retail segment of its operations, CapitaLand is strongly focussed on diversification of tenants and tenant categories so that it is not at the mercy of a small number of retailers: if one doesn’t make it then it doesn’t cause a shudder through the whole portfolio. The largest retail tenants in terms of contribution to revenue are supermarket operators NTUC FairPrice and Cold Storage, which contribute 3.3 per cent, and Breadtalk, which contributes 1.2 per cent. Neither is CapitaLand overly dependent on categories witha signficant vulnerability to e-commerce. Fashion accounts for only 5.3 per cent of revenues, while thecompany overweights where the money is: food and beverage (18.4 per cent of revenues) and health andbeauty (7.3 per cent). In the second quarter, nearly half of its new openings across the portfolio were in food and beverage,followed by leisure and entertainment, and health and beauty. The outlook is good, but nothing is immune to failure The outlook isn’t all roses, given that Singapore’s economic growth isn’t exactly setting the world on fire.Year-on-year GDP growth was a paltry 0.5 per cent in the second quarter and the government’s Ministry of Trade and Industry (MITI) is not expecting much improvement in the second half. Moreover, inflationremains a concern at 4 per cent, not catastrophic but uncomfortably elevated. On the positive side though is the potential for more tourism-driven growth and limited new retail supply scheduled to open. On the former, tourist arrivals are expected to return to 2019 levels in 2024. On the latter, citing CBRE Research, the company expects only 340,000 square feet per year (just under32,000 square metres) coming online over the next four years, and even that number is inflated by thedelayed arrival of projects that should have been completed last year. CapitaLand, like other mall operators in Southeast Asia, is relaxed about the growth of e-commerce and able to adapt its tenant mix fairly easily to what has become only a very gradual change in consumer behaviour: in the months since the end of 2021, e-commerce has rarely risen above 15 per cent of retail sales. Even so, food and beverage is likely to continue dominating leasing activity, at least for the time-beingand the recent closures of UFC Gym and Haus Athletics show that even retailers in categories immune toe-commerce are not immune to failure. Sometimes, in retail, you can have too much of a good thing.