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ENTRY OF INTERNATIONAL RETAILERS
TO AUSTRALIA
Australia continues to be an
attractive market for new entrants
and expansions by international
retailers, particularly along the prime
shopping strips in the CBD, as the
market is relatively new to international
retail brands. In 2017, H&M launched
its city-centre store in Perth, while
Adidas, Levi’s and Lululemon Athletica
secured flagship spaces along Rundle
Mall in Adelaide. Mid-range fashion
and specialist clothing brands are
expected to contribute to brand entry
over the next few years, with city-
centre locations as their focus given
their broad target market.
(1)
ASSET REDEVELOPMENT IN PERTH
Construction of a revamped
facade and additional retail area
commenced at Plaza Arcade in 4Q
FY 2016/17. The works are estimated
to be completed by early 2018. With
neighbouring buildings such as Forrest
Chase and Raine Square also in the
midst of redevelopment, the new
international anchor tenant secured
for Plaza Arcade will complement the
revitalised retail offerings in Perth’s city
centre and improve the leasing and
positioning of Plaza Arcade.
MALL REPOSITIONING IN CHINA
The China Property secured a new
long-term tenant, Markor International
Home Furnishings Co., Ltd, one of
the largest furniture retailers in China.
It is listed on the Shanghai Stock
Exchange with a market capitalisation
of approximately RMB8.5 billion
(approximately S$1.7 billion) as at
30 June 2017. The new tenancy
agreement, which incorporates a fixed
rent lease with periodic rental step-up,
will provide income stability amidst
the challenging market landscape in
Chengdu which has been impacted by
increased competition and austerity
measures by the central government.
In April 2017, the mall was handed
over to Markor International Home
Furnishings Co., Ltd. Renovation works
at the China Property commenced
in 4Q FY 2016/17 and is targeted for
completion by end-2017.
VALUATION
Starhill Global REIT’s property portfolio
was valued at S$3,136.3 million as
at 30 June 2017, stable from the
previous valuation as at 30 June 2016.
The higher valuations for the Singapore
Properties and Australia Properties, as
well as positive net foreign currency
movements, were offset by the
divestment of Harajuku Secondo, and
lower valuations for the China Property
and the Malaysia Properties. Harajuku
Secondo in Tokyo, Japan was divested
in May 2017 as part of the strategy to
refine the portfolio.
As at 30 June 2017, the combined
valuation of the Wisma Atria Property
and the Ngee Ann City Property
remains largely unchanged, increasing
by S$6.0 million from 30 June 2016,
to S$2,147.0 million. The Singapore
Properties were positively impacted
by compression in both retail and
office capitalisation rates that
were supported by recent market
transactions, partially offset by lower
market rents for the office components
in consideration of the softer office
market in Singapore.
The combined valuation of the
Australia Properties was S$540.1
million (A$511.0 million), increasing
S$34.6 million from that as at 30 June
2016 mainly due to the appreciation
of the Australian dollar and lower
capitalisation rates for David Jones
Building following recent market
transactions. The increase was
partially offset by a marginally lower
valuation for Plaza Arcade due to the
ongoing redevelopment works. The
valuation for Myer Centre Adelaide
remained relatively stable compared
to that as at 30 June 2016.
The Malaysia Properties were valued
at S$357.5 million (RM1,115.0 million), a
decrease of S$20.9 million compared
to 30 June 2016 mainly due the weaker
Malaysian Ringgit, as well as softer
retail outlook and new upcoming
retail supply in Malaysia.
The valuation of the China Property
declined S$12.6 million compared to
that as at 30 June 2016 mainly as
a result of the conversion from a
department store model to a single
tenancy model. As at 30 June 2017,
the valuation of the China Property is
S$32.1 million (RMB158.0 million).
The Japan Properties were valued
at S$59.6 million (JPY4,855.0 million),
a decrease of S$7.4 million from the
previous valuation as at 30 June
2016 mainly due to the divestment of
Harajuku Secondo. The valuation of
the remaining Japanese properties
decreased 4.8% yoy in Singapore
dollar terms due to the depreciation
of the Japanese Yen compared to
30 June 2016.
Note:
(1)
CBRE Research, Asia Pacific Real Estate Market
Outlook, Australia, 2017
GROSS REVENUE BY COUNTRY
FY 2016/17
AUSTRALIA
22.7
%
1.1
%
CHINA
1.4
%
JAPAN
62.2
%
SINGAPORE
12.6
%
MALAYSIA
PROPERTY PORTFOLIO
SUMMARY
30
STARHILL GLOBAL REIT ANNUAL REPORT FY 2016/17