Shoppers unshackled
After several challenging years, households are gradually returning to retail spending, unshackled by lower interest rates and lower mortgage repayments. The uncertain global outlook is not hitting local sentiment in the same way, as we are seeing abroad.
A different shopping basket
The returning shopper looks very different in 2025. After a lockdown, there is a clear reset in priorities. There is a sense of revenge shopping, to make up for lost time, as spending skews towards dining out, travel and personal services.
Finding a new equilibrium
Meanwhile, the big structural headwinds for the retail sector are gradually subsiding. Households are not rushing to online portals with the same fervour, as in‑store sales recover, and more people find a new balance to their shopping habits.
Remixing tenants
In the face of changing consumer behaviour and online shopping, retail landlords are adapting accordingly. There is an urgent push to remix tenancies within shopping malls, incrementally shifting towards dining, personal services and experiential offerings.
A shopping mall comeback
Certainly, the retail sector has seen a long correction since 2018, more so in regional and sub‑regional malls, and less so in resilient large‑format centres. In 2025, there is a broader recovery taking hold, driving higher rents and firmer yields.
Retail outperformance
For now, retail shopping centres are outperforming office and industrial, given their relatively greater sensitivity to lower interest rates. The gap between equity and credit returns is narrowing, with lower cash rates being the key catalyst.
