IN FOCUS: Are there too many malls in Singapore?

“Some of them, they run the business here, they are not even making a profit yet, but they just keep dumping money just to build a brand … they just want the market share,” he said.

“We cannot afford to do that. So every single one of the shops that we open, we must make sure that it’s profitable.”

Developers stressed that rent is not always the deciding factor when picking tenants.

CapitaLand’s Mr Yeo said it is more important for them to think of the overall trade mix.

“Why does the ‘evil REIT’ have bookstores which don’t pay high rent? Because you manage the portfolio, so paradoxically, maximising the value of the property does not mean maximising the value of every single unit,” he said.

For example, having a bookstore in a mall can bring footfall during off-peak hours. The vibe and energy it creates justifies the higher rent of other tenants, which then makes up for the bookstore’s lower rent.

“That’s how we think about trade mix. Honestly, it’s very seldom who can pay the highest rent,” he said, adding that that factor is only considered when deciding between a few similar brands that fall under the same category.

“Otherwise it’ll all be gold shops, EVs, massage shops,” he said.

Mr Yeo said pulling together a good trade mix is like having a good plate of economy rice. There are the staples – supermarkets, foodcourts – but also a little something special. In a mall’s case, that means independent and niche brands.

“You need to have those staples, because if your whole mall is very niche, small tenants, it’s also difficult to survive,” he said.

A mall can have 200 to 300 tenants. “A percentage of that will definitely have to be your utilitarian ones,” he said.