CapitaLand Integrated Commercial Trust - Annual Report 2023

and increased focus onwellness, Environmental, Social and Governance (ESG) factors. Although the proportion of online retail trade (excluding motor vehicles) has significantly elevated from that of pre-pandemic levels at the annual average of 14.4% in 2023 compared to 6.8% in 2019, offline sales continued to contribute to majority of retail sales. With the increased usage of mobile phones, e-commerce has evolved to become “palm retail”. More retailers are utilising mobile apps to offer discounts and loyalty programs, as well as click-and-collect services at physical stores to drive traffic. Going forward, there is increasing pressure for retailers to innovate and incorporate omnichannel shopping into their retail offerings and services. While footfall in most malls have yet to recover to prepandemic levels, there is potential upside going forward as tenant sales are meeting or even exceeding prepandemic levels. Across all submarkets, consumers are spending more time on average per visit in both 2022 and 2023 compared to pre-COVID-19 levels and is especially pronounced in the City Fringe area. While Orchard Road continues to attract affluent shoppers and local visitors, the City Fringe submarket outperformed in both frequency of visits and dwell time, which could likely be attributed to the closer proximity to consumers’ homes compared to Orchard Road or City Hall/Marina Centre areas. Rejuvenation of retail spaces, coupled with refresh of tenant mix, could be another factor to the trends observed. To attract more footfall, retailers and shopping centres continued to introduce experiential retail and events. This ranges from using artificial intelligence (AI), to hosting activities or workshops for consumers to try their products. Experiential event spaces are typically decorated such that they are deemed Instagram-worthy. This drives traffic to the physical store and increases brand awareness through consumers’ posts on social media. Malls that hold experiential events generally see a 10-25% increase in footfall. For instance, the weekly footfall increased by more than 20% in the week that Raffles City launched its Future/Forward event between 21 July and 31 August 2023, compared to the previous week when there were no events. Consumers continue to place importance on sustainability, wellness and environment. While prepandemic openings/expansions were dominated by product retailers, 2023 had seen a shift towards “wellness retail”, such as gyms and services. The increased level of openings and expansions is in response to the increasing emphasis on health and wellness post-pandemic. Many consumers now prefer boutique gyms which aremore personalised and closer to their homes, e.g. bouldering and spinning gyms. More restaurants are also incorporating local produce into their cuisines to reduce their carbon footprint, and to support local farmers. Looking ahead, retailers and landlords need to stay adaptable to the evolving lifestyle habits of consumers. With an increased awareness of sustainability and wellness, as well as preferences surrounding e-commerce, adaptation to these consumption patterns and shoppers’ behavioural trends will determine the attractiveness of the mall and its footfall. Existing Retail Supply As of 4Q 2023, the total islandwide retail stock increased by 0.7% to 67.6 million sq ft on a YoY basis. Private retail stock represented 74.3% (50.2 million sq ft) of the total retail stock. Overall, the total new completion in 2023 was estimated at 0.8 million sq ft. This included some delayed completions that were postponed to 2023, such as Sengkang Grand Mall (109,000 sq ft) and Shaw Plaza Balestier (67,500 sq ft), as well as 2023-slated completions such as One Holland Village (117,000 sq ft) and Guoco Midtown phase I (30,000 sq ft). However, some retail stock was removed, including JCube (210,000 sq ft) due to the commencement of redevelopment for residential use. In 4Q 2023, private retail stock in Orchard Road contracted marginally by 1.3% YoY to 7.2 million sq ft and accounted for 10.7% of the total islandwide retail stock. Similarly, the Downtown Core region, comprising Bugis, City Hall, Marina Centre, Raffles Place, and Shenton Way, saw a decrease in private retail stock by 1.3% YoY to 7.3 million sq ft in 4Q 2023 and accounted for approximately 10.9% of islandwide retail stock. Total Retail Floor Space per Capita Total retail floor space per capita in Singapore was estimated to be approximately 11.4 sq ft net lettable area (NLA) per capita in 4Q 2023, a contraction from 11.9 sq ft in the previous year. The contraction was attributed to population growth in 2023 while total stock grew at a slower rate. Singapore’s total retail floor space per capita provision was higher than those of Greater Los Angeles, Greater Sydney and Shanghai, while lower than those of London, Hong Kong and Bangkok. 94 CAPITALAND INTEGRATED COMMERCIAL TRUST INDEPENDENT MARKET REVIEW

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