Is Singapore’s obsession with image creating the right image?BY LARISSA MURPHY
As a small city state Singapore has managed to build an excellent reputation, it is perceived by the entire world as clean, safe and efficient, most cities can only dream of such an image. Some may say this conveys a boring persona for the city yet Singapore has overcome this and is obviously perceived as must see tourist destination with over 12 million tourists visiting the city last year.
No other city in the world has more than double its population in visitors.
Singapore achieves this by promoting itself as a destination with multiple and diverse attractions including dining, gambling, culture and most importantly shopping. It is the latter of these that helps fuel the obsession with image, as more and more superstar stores open, people become more brand and image aware.
You have to have the latest phone, gadget, watch, designer bag etc. People start choosing where they party, dine and drink based on image, where they want to be seen rather than on the basis of quality and value and all this fuels developers to want to make their building the most fashionable, the most sought after, the place to be seen.
There is now stiff competition between the retail malls to attract the best brands and create the right image, nowhere is this more obvious than on Orchard Road with the newer malls like Ion prospering, while others are feeling the pressure to keep up.
On a recent walk down Orchard road it was clear that older offerings like Wisma Atria and Plaza Singapura are getting make overs with no expense spared it would seem. The cost of the latest face lift to Wisma Atria is estimated at $31 million not to mention the loss in revenue due the closure of a this a number of outlets to enable the transformation as well as the loss of revenue to remaining tenants while the outside the building looks as if it is closed for construction. You would imagine that such a considerable investment in a property would need to show a significant return but this is not the always the case.
In Singapore the URA have strict GFA guidelines so it is unlikely that there will be any addition to net lettable area. Looking at the proposed design it would appear that it is not one that will maximise efficiency of space to increase lettable area in fact quite the opposite, so the only potential for revenue gain is an increase in rental value which is estimated at $2.5 million a year.
On this basis it will take at least 13 years just to recover the cost of the capital expenditure. Given that the last extensive refurbishment was only 8 years ago this whole exercise would seem to set the stage for catastrophic losses all in the name of creating a better image.
Plaza Singapura is not much better having had a number of refurbishments over the years the last being in 2008. Capital Land are now spending $150 million to convert office space to retail space and stick some illuminated waves on the outside of the building.
Once again I question the financial viability of this project. Capital Land is also spending $40 million on upgrading Illuma which only opened 3 years ago.
So while Singapore markets itself as a safe and stable market in which to invest, the large scale retail developers seem to have let their obsession with image cloud their business judgement and are busy creating a reputation where image is all important at any cost. Singapore’s obsession with all that is shiny and new is costing millions in financially unviable projects.
If developers want to increase revenues and customer traffic then they would be better spending their money ensuring that the shopping experience is a good one, that the layout of the mall works, is accessible and easy to navigate rather than wasting their money on the external appearence of the building which shoppers really couldn’t care less about.
At the end of the day retailers care about the volume of traffic and shoppers care about the quality of experience so you do not see retail developers anywhere else in the world spending money so frivolously on external facades above ground level. Singapore needs to be cautious or the positive image which has been so carefully constructed could all be undone with the reckless and relentless pursuit of image.
Larissa Murphy, Director, HBO+EMTB