- We expect retail sales to remain resilient in 2023, driven by strength in the labour market and recovery in tourist arrivals. The Singapore Tourism Board (STB) expects tourist arrivals to reach 12 to 14 million in 2023, more than doubling from 6.3 million in 2022.
- The recovery in consumer spending is positive for retail rents in Singapore, which should continue to recover following a 1.6% rise in the fourth quarter of 2022. This is further supported by limited new supply of retail space coming up in 2023-2025.
- The GST hike which became effective in January 2023 may have led to some big-ticket purchases being brought forward, but is unlikely to dampen consumer spending sustainably.
- Retail REITs offer an average dividend yield of 6.8%, above the dividend yield of the Straits Times Index (STI) of 4.1%. Amongst the seven S-REITs with significant exposure to Singapore-based retail assets, Starhill Global REIT and Lendlease REIT offer the highest dividend yield of 7.0% and 6.8% respectively.
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