MODELING THE DYNAMIC STRUCTURE BETWEEN CAPITAL VALUE FORMATION AND EXPECTATIONS THE SINGAPORE PRIME RETAIL SECTOR

Abstract

The Singapore retail sector is growing in importance as many investors see the potential of investing in the CapitaMall Trust real estate investment trust (REIT). This REIT has been increasing its portfolio of shopping malls island wide with the subsequent improvement of its malls' tenant mix. These developments have significantly generated renewed interest among investors. It would therefore be appropriate at the retail real estate market micro-structure level, to investigate the price discovery of capital values (CVs) for retail accommodation in Singapore. The retail sector's CVs are envisaged to change dynamically with rental, cost and general demand expectations as well as exogenous shocks, such as SARS (Severe Acute Respiratory Syndrome) outbreak. A structural model of the Singapore retail sector is formulated via system dynamics modeling in order to ascertain the CVs of the prime retail sector in Singapore, in conjunction with scenario analysis.