Shoppers' paradise lost? Singapore's malls suffer as locals, tourists curb spending
By Manesha Pereira and Masayuki Kitano
SINGAPORE (Reuters) - After serving only a handful of customers in five hours on a recent weekday, Sam Goh said he was worried the sportswear shop he manages, LIV ACTIV, will eventually join other brands in leaving Singapore's Orchard Road shopping boulevard.
Singapore's reputation as a shoppers' paradise, which saw investors pour S$10 billion ($7.25 billion) into retail developments here in the past five years, is taking a pummeling because of weakness in the local economy and a drop in spending by tourists. Commercial space has increased by a tenth in that period, but vacancy rates have risen to 7.3 percent from 5.0 percent and industry analysts expect them to keep rising.
"Instantly when you enter this mall you see emptiness," said the 44-year-old Goh, whose shop gave up a quarter of its space last month to cut costs.
Further down the street, cashiers play games on their phones, while some shop assistants have improvised a mini-golf game along a quiet corridor of a shopping center. Thirteen of 16 units on the 5th floor lack tenants.
Store space in places with lower foot traffic is getting few takers. For example, in a suburban area on the west side of Singapore, more than two-thirds of a basement shopping center that has been open for almost two years remains empty.
These are all signs of bets that have gone wrong: that the domestic economy would remain robust, allowing demand from this city state of 5.5 million people to stay strong, and that retail splurges by visitors from the rising middle classes in China, India and Southeast Asia would keep increasing.
For Singapore this is not a small thing - wholesale and retail trade vies with manufacturing to be the biggest contributor to the city-state's gross domestic product and it is the biggest employer here.
But the sluggish global economy has put a brake on spending by Singaporeans, especially workers in hard-hit export sectors. Shoppers from abroad, meanwhile, spent 7 percent less in the first nine months of 2015 than they did in the same period of 2014. Continued...