EVOLUTION OF SHOPPING MALLS: ARE STRATA-TITLED MALLS LOSING APPEAL AGAINST REIT MALLS AND SINGLE-OWNER MALLS?

Abstract

Accompanied by Singapore’s economic growth, the retail landscape had also advanced accordingly to the evolving needs and preference of consumers and developers. Strata-titled malls, that was once the common modus operandi of shopping malls, is facing immense competition from newer planned malls. This raises the question of whether strata-titled malls are losing appeal against REIT malls and single-owner malls. With strata-titled malls facing the possibility of economic obsolescence, land is not optimally utilized in a land-scarce Singapore. However, inadequate number of literatures have been devoted to the research of strata-titled malls in Singapore. Hence, coupled with the literature gaps and rising concerns of strata-titled malls falling into disparity, forms the impetus of this study.

Panel data involving strata-titled price transactions from Year 1995 to 2018 were collected. The data was separated into two different event windows and analyzed using Difference in Difference (DID) estimator. The first event period, from Year 1995 to 2006 indicated the complementary effect where strata-titled malls were observed to have a price premium of 29.4%. However, from Year 2007 to 2018, strata-titled malls were faced with high competition leading to a substitution effect. Strata-titled malls were observed to have a price discount of 11.9% when they were located near REIT malls or single-owner malls.

The results indicated the changing trend where currently, strata-titled malls are negatively affected by the introduction of REIT malls and single-owner malls. Going forward, the government, developers and strata-titled mall owners should consider various approaches to enhance the attractiveness of strata-titled malls.