Consumer sentiment and sales performance exhibit mixed signals

• Consumption remained a mixed bag. The CSI fluctuated during the quarter, reading 100.7 in April, 98.4 in May and 100.9 in June. Retail sales decreased slightly during the quarter.
• The monthly number of foreign tourists in May was 1,418,463, rising 63.6% y-o-y. Among them, Chinese tourists accounted for 27.9%, becoming the leading source of international visitors.

The vacancy rates of Shopping Malls and High Streets are polarised

• No notable Shopping Mall (SM) or High Street (HS) stock was added to the basket in Q2 2024.
• Except for Times Stream and Times Square, other shopping malls experienced an erosion in occupancy over the quarter. The High Street vacancy was at its lowest level since Q4 2020.

Myeongdong demonstrates the steepest rent growth

• Shopping Malls and High Streets saw a 1.1% and 0.7% increase in net effective rents q-o-q, respectively. Among High Streets, Myeongdong’s rent growth outpaced others.
• Both Shopping Mall and High Street yields have expanded equally by 10 basis points. Only a few High Street transactions, such as SC Bank and Samsung Digital Center, were concluded.

Outlook: A lack of recent transactions turns investor sentiment sour

• The limited buyer pool and higher-for-longer interest rates will subdue investment activity in the retail space. The fluctuations in footfall and mixed economic indicators will act as headwinds.
• With no imminent supply in the pipeline, overall occupancy will not alter much from the current level. The polarisation in demand for High Streets is likely to persist.