[singapore] Singapore real estate investment trusts (S-Reits) with retail assets in China have posted a mixed performance in 2024 with stable occupancies but negative rental reversions, amid cautious consumer sentiment in the market.
Even so, some positive trends have started to emerge, with the S-Reits reporting improvements in shopper traffic and tenant sales in their latest results.
At the broader macro level, China consumption has also started 2025 strong, with retail sales rising 4 per cent year on year (yoy) in the January-to-February period, an improvement from the 3.7 per cent growth in December 2024. Market expectations are for retail sales to keep expanding this year, amid stimulus from the central government.
CBRE Research forecast China retail sales growth to reach 5 per cent in 2025, up from 3.5 per cent in 2024. It noted that several key retail categories exhibited a strong recovery after the country’s central and local governments stepped up consumption stimulus policies in the second half of 2024.
A continued improvement in consumer sentiment could be beneficial for S-Reits that hold retail assets in the Greater China region over the long term, even as some near-term headwinds persist.
CapitaLand China Trust (CLCT) reported net property income (NPI) of 1.2 billion yuan (S$221.8 million) in FY2024, supported by a stronger retail performance. However, lower contributions from its business parks as well as logistics parks resulted in a 5.8 per cent yoy decline in NPI.
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Retail assets constitute over 70 per cent of CLCT’s portfolio, with the rest business and logistics parks.
The trust’s manager said that on a like-for-like basis for the Reit’s nine retail assets, retail NPI increased 1.9 per cent yoy in FY2024. The three malls that underwent asset enhancement initiatives in 2023 demonstrated strong performance, achieving a 13.7 per cent yoy growth in NPI.
Its portfolio retail occupancy rate was stable and high – at 98.2 per cent as at Dec 31, 2024. Rental reversion for FY2024, however, was -1.1 per cent, as the manager sought to attract and onboard new tenants. Both shopper traffic and tenant sales improved, compared to levels in the year before.
The manager said that CLCT’s retail properties remained a key asset class positioned to benefit from government initiatives aimed at boosting domestic consumption, enhancing long-term retail demand.
Similarly, the manager of Sasseur Reit noted that the Chinese government has identified boosting consumption as a priority, and it expects new opportunities to emerge in creating innovative consumer experiences, strengthening supply chains, and unlocking untapped market potential.
Sasseur Reit – which owns four outlet malls in China – reported stable entrusted management agreement rental income and distributable income in FY2024. This was amid lower finance costs and tax expenses, despite a yoy reduction in sales.
Its portfolio occupancy rose to 98.9 per cent as at Dec 31 – a record, as its manager’s leasing strategies and efforts continued to drive high occupancy levels.
The manager said that preliminary sales data from this year’s Chinese New Year season indicated strong buying momentum, with double-digit sales growth across the portfolio’s outlets in January.
“Given these positive indicators, we remain cautiously optimistic about the sales outlook for our portfolio’s outlets in 2025,” it added.
Elsewhere, Mapletree Pan Asia Commercial Trust (MPACT), which owns the Festival Walk shopping centre in Hong Kong, said in its third-quarter FY2025 results that the mall had above-market improvements in shopper traffic and tenant sales. They were up 15.6 per cent and 13.1 per cent, respectively, quarter on quarter.
MPACT’s manager added that intensified marketing efforts countered the broad impact of Hong Kong residents’ currency-driven outbound travel, and a cross-border consumption trend.
Festival Walk’s committed occupancy improved to 97.1 per cent as at Dec 31, up from 96.4 per cent three months earlier. Rental reversions, however, were -7.2 per cent in the financial year to date, with the Reit also reporting negative rental reversions in its other properties in China.
The manager noted that Greater China faces near-term headwinds, but maintains its conviction in the market’s significant role in Asia’s long-term economic growth.
BHG Retail Reit reported a 16.3 per cent improvement in distribution per unit for FY2024, on the back of lower financing costs. Its portfolio maintained a healthy occupancy rate of 95.8 per cent as at end-2024, as its manager continued to be proactive in improving the quality of its tenant mix.
The manager said it would remain focused on executing its current strategy of refreshing and optimising the tenant mix in its malls, remaining prudent in its capital management, and pursuing yield-accretive acquisitions.
CBRE Research said in its 2025 China Real Estate Market Outlook report that retail vacancy rates are expected to decline after supply peaks in 2025. It expects landlords this year to focus largely on improving operating performance by optimising and upgrading tenant profiles.
However, it added that shopping centre rents are expected to decline in the short term before gradually stabilising in the second half of 2025, as a further recovery in consumption will be needed to bring about a full rebound of consumer confidence and retailers’ rental budgets. SGX RESEARCH
The writer is a research analyst at SGX. For more research and information on Singapore’s Reit sector, visit sgx.com/research-education/sectors for the S-Reits & Property Trusts Chartbook.
