Wednesday, February 11, 2009

Liang Court Shops Hit As Japan Expats Exit

Source : The Straits Times, Feb 10, 2009

STORES serving the Japanese market in Liang Court are bemoaning a big drop in sales, with several saying they will give up their leases if the poor business persists.

An exodus of Japanese expats has resulted in some stores in Liang Court, which serve the Japanese market, suffering a big drop in sales. One example is Liu Xiang Tea Craft, where most customers are wives of Japanese workers posted here. -- ST PHOTO: SAMUEL HE

The dip was bad enough for the mall's landlord, AsiaMalls, to stage a $40 million revamp last year to move away from its roots as a shopping centre catering mainly to Japanese expatriates and appeal to a wider group.

It included reorganising the mall's layout and increasing visibility for shop fronts. Tenants such as Taiwanese restaurant Shin Yeh and furniture shop Living Works were introduced.

It was a necessary move.

According to the Japanese Association, many of its members have left recently, and more are set to go next month - the month Japanese firms traditionally end their contracts.

The association's secretary-general, Mr Kazuo Sugino, said he 'expects that many more expats will be asked to return home after March due to the economic downturn'.

There were 25,969 Japanese expats in Singapore in 2007, the latest year for which figures are available. This was a slight drop from the 26,370 in 2006.

Japanese housewife I. Hiroko, 42, knows of 10 Japanese families which will be leaving next month and wonders when it will be her turn to leave.

All this has left some Liang Court stores, which sell everything from Chinese tea to bookmarks, reeling.

In the past two months, Liu Xiang Tea Craft has lost 25 per cent of its regular clientele, mainly tea-appreciation students, along with half of its walk-in customers. Almost all the customers are wives of Japanese workers posted here.

It looks set to get even worse: 12 more students will be packing their teacups to leave next month.

'Companies usually give them two months' notice; then they are gone, and so is my customer base,' said Mr Lee Chee Keong, the 56-year-old owner of the store.

Some tenants are nearly at the end of their tether.

A Big John outlet on the first floor, which sells a popular Japanese brand of jeans, has been in the red since it opened in June last year. Its director, Mr Vincent Chua, 54, will not be renewing his lease, which has a year and three months to go.

'There are no customers, what can we do? My staff just sit around and look at walls. The Japanese just go to the supermarket and go home,' he said.

In contrast, shops selling goods that appeal to a wider market are not complaining.

A spokesman for Subway food outlet said business was 'better than anticipated' and he had no problems covering costs. A spokesman for electronics retailer Audiohouse said business had been 'quite swift' during the soft opening last August and grand opening in December.

The revamp resulted in shopper traffic hitting 700,000 in December, up 148 per cent from the previous year, said Ms Stephnie Ho, general manager of AsiaMall Management. Last month, shopper traffic was about 590,000.

The idea, she said, was to extend the mall's repertoire to 'broaden its appeal'.

She added that over the past seven months, the mall has purchased tenants' vouchers and products worth $92,000.

'This directly goes back to the tenants as sales chalked up. In our promotions for 2009, we will continue with this strategy to boost sales,' she said.

Liang Court started life in 1983, catering mainly to the Japanese market.

For a while, boosted by the anchor tenant Daimaru, a popular Japanese department store, it was a shining light in Singapore's retail industry, despite being quite a way off the Orchard Road shopping belt.

It is perhaps best remembered for its extravagant Christmas decorations, which electrified crowds and earned accolades from the then Singapore Tourist Promotion Board.

But Liang Court's history provides little comfort for Perpetua Fashion.

Two months ago, the women's store was selling about 10 dresses a week to Japanese customers. 'Now we would be lucky if we sell even a third of that,' said shop assistant Marienel Galano, 23. 'If there is increased traffic from the revamp, we are not seeing it.'

1 comment:

Asia Economic Institute said...

Hey not sure if you looked into this but what do you know about the relations between Japan and Africa, or Singapore and Japan? I've read this really great article and would like your thoughts and comments.

Japan Leads the Way in Africa’s Economic Development
01 Sep 2008

In the last 15 years, Japan has emerged as the global leader in the development of Africa. By doing so, it has also strengthened its bilateral relations with the continent and has secured economic benefits for both parties.
A major way Japan has spearheaded the task of invigorating Africa’s economy is through the Tokyo International Conference on African Development (TICAD). The TICAD is a conference in Tokyo held every five years to improve relations between Africa and its development partners. The first TICAD, TICAD I, took place in 1993, and the most recent, TICAD IV, wrapped up at the end of May of 2008. At all four conferences, Japan has reinforced its long-term commitment to promoting peace and economic stability in Africa.
During TICAD I, Japan took the lead in producing the “Tokyo Declaration on African Development,” a document that aimed to encourage high-level policy dialogue between Africa and its development partners. Japan remained optimistic about Africa's potential though many other of Africa's development partners began to lose interest. At the end of TICAD I, several prospects appeared promising, though almost nothing was guaranteed.
Five years later, TICAD II generated the “Tokyo Agenda for Action,” which was much more action-oriented than the Tokyo Declaration on African Development. This document called for poverty reduction and a push for Africa’s integration into the global economy. TICAD III drew over 1,000 African delegates including the Chairperson of the African Union, Thabo Mbeki. This conference analyzed the achievements of TICAD over the past 10 years and developed future goals for African development.
TICAD IV took place from May 28-30 2008. Japan's Prime Minister Yasuo Fukuda met with representatives from 51 African countries, 22 donor nations, and 55 international organizations. In all, more than 3,000 people participated in TICAD IV making it the most heavily attended TICAD of the four. The conference aimed to boost economic growth, ensure human security, and address environmental issues in Africa.
The conference recognized that the key to Africa's growth is the development of the continent’s infrastructure. History has proven that improvements in transportation infrastructure attract more private investments. Japan has targeted Africa's infrastructure as the main area it will develop, pledging $4 billion in Official Development Assistance (ODA) loans by the end of 2012. Increasing ODA loans will encourage Japanese private-sector investment in Africa. Furthermore, Japan will double its grant aid and technical cooperation in the next five years. The Japanese government will also establish a fund at the Japan Bank for International Cooperation that aims to double investment in Africa.
At the conference, Prime Minister Fukuda also tracked Africa’s economic progress over the past decade. Sub-Saharan Africa's economy grew at a rate of 5% from 2004-2007 and reached 6% in late 2007. Japan will look to further increase Africa's economic growth by helping the continent double its rice output to 28 million tons by 2018. Furthermore, Japan will give a significant portion of a $100 million global emergency food assistance package to Africa.
Africa has long complained that though it contributes very few greenhouse gases, it must still suffer the effects of global warming. Africa only contributes about 3.8% of the world’s greenhouse gas emissions. By taking the lead on climate change initiatives, Japan has indirectly assisted in resolving Africa’s environmental problems. Japan’s “Cool Earth 50,” introduced in 2007, aims to reduce greenhouse gas emissions by 50% by 2050. Japan has also led the way in the creation of the $10 billion Climate Change Fund. In addition, Japan automakers have made a push to produce cleaner, more fuel-efficient cars including many hybrid models.
In the next five years, Japan will train 100,000 people as health workers who will travel to African countries that suffer from a shortage of health care. Japan has also pledged $560 million to the Global Fund to fight AIDS, Tuberculosis, and Malaria, about $330 million of which will go directly to Africa.
The TICAD conferences have given Japan tremendous opportunities to strengthen diplomatic and economic ties with Africa. As a resource-rich continent, Africa can offer Japan many precious metals that the country needs for its high-tech industries. Africa is home to 89% of the world's platinum, 60% of its diamonds, 34% of its chrome, 37% of its zirconium, and 53% of its cobalt. Because the Japan Bank for International Cooperation is providing $490 million to co-sponsor a nickel mining project in Madagascar, Japan’s Sumitomo Corporation will have the right to purchase 30,000 tons of nickel annually. In addition, Japan will begin to import platinum, nickel and cobalt from Botswana.
With strong bilateral ties with Africa, Japan also has Africa’s support as it seeks a permanent seat on the UN Security Council. The African countries account for 25% of the UN General Assembly. Africa’s support has been crucial to Japan winning the Asian non-permanent Security Council seat in 1996 and the election of Shigeru Oda to the UN International Court of Justice. If it is to secure Africa’s political support and imports of raw materials, it is in Japan’s best interest to continue to assist Africa in its economic development. As long as Japan continues to invest in Africa and solidify ties with it though future TICAD conferences, both parties will continue to gain significant benefits.

Here's the other

Japan, Singapore CRE Investors Brave Liquidity Crunch
MBA (8/30/2007)

Large-lot deals and office sector activity spurred Japan and Singapore into a strong first half of the year, as the current global liquidity crisis does not appear to stall real estate investment in Asia.
Japan and Singapore, with collective investment amount in large-lot deals during the first and second quarters, accounted for more than half of the regional total, and international institutions and real estate investment trusts continued their activity throughout the region, according to research from CB Richard Ellis International.
Research analysts said investors remained “overwhelmingly positive” toward the Japanese real estate market with nine consecutive quarters of economic expansion and an annualized real growth rate of 3.3 percent during the first quarter the year.
Indeed, Reuters reported earlier this month that New York-based private investors, The Blackstone Group, will open a real estate office in Tokyo to look for deals in Japan's property market, and Bloomberg reported Farifield, Conn.-based GE Real Estate could increase its Japanese property holdings by more than 60 percent this year to reach $8.6 billion. GE Real Estate has been in Japan since 1998.
“Japan has been ready for global investments for a long time. Now, it is coming to fruition and a lot of investment will go to Japan,” said Raymond Mobrez Ph.D, director at, Los Angeles, Calif.
The combined value of the first quarter’s 10 largest investment deals totaled $6.9 billion in U.S. currency, including the acquisition of a portfolio of industrial properties by Tokyo-based Secured Capital Japan and DLJ Real Estate Capital Partners at a price of nearly $1.4 billion.
Meanwhile, Fitch Ratings, New York, reported that the losses from subprime exposure in certain Japanese banks would be "comfortably absorbed" by a portion of the bank's annual earnings.
“None [of the banks] should see its solvency threatened from this factor alone, as the exposures are only a small fraction of the banks' equity,” Fitch said. “The large Japanese banks have sponsored and provided liquidity commitments to a number of conduits; to fulfill these commitments they may need to raise liquidity in yen and dollars, although these banks are unlikely to encounter difficulties raising the necessary liquidity, given the limited size of these commitments versus their balance sheets [up to 5 percent].”
“There is more order in the financial infrastructure in Japan than in any other nation in Asia,” Mobrez said.
CBRE International said Japanese REITs remained dominant players, adding to their portfolios in Tokyo and the rest of Japan. However, with the financial markets pricing a further interest rate increase, the report said that the 10-year Japanese Government Bonds yield increased from a 1.6 percent average in April to a 1.9 percent average in June, shrinking the positive spread of net operating income yields.

In Singapore, investment transactions totaled more than $15.8 billion in the first half of the year, a 70 percent increase from the previous year, according to CBRE International. Development sites drove acquisitions as private equity groups and foreign funds gained interest in office properties.
MCP Raffle, a unit of Macquarie Global Property Advisors, purchased Temasek Tower for nearly $660.8 million, making it the most significant office transaction in the first half of the year, CBRE said.
Average rents for Singapore industrial space also increased in the second quarter, with high-tech space posting its largest gains in five years, according to CBRE. Analysts expect supply constraints in the office market and optimistic business conditions to increase demand and rents.
The Singaporean banks were the most transparent in Asia, according to Fitch. The overall collateralized debt obligation exposure in the Singaporean banks was at nearly $1.5 billion, which could potentially give rise to losses that would dent annual earnings. However, Fitch said it would not materially weaken the banks' capital,
“Singapore has always been an attractive investment hub," Mobrez said, in reference to Singapore’s financial stability, based on policy and infrastructure. "Financial market discipline is a role model for China to copy from Singapore.”

Development Bank of Singapore disclosed $850 million of CDO/collateralized loan obligation exposures, including asset-backed securities exposure of $188 million. Not all of the $188 million is subprime-related—some is A-paper or higher—and it amounts to nearly 1.5 percent of DBS Group's equity.
Fitch’s data indicated limited exposure to problematic subprime mortgage assets among life insurers and—in a worst-case scenario—losses related to subprime exposures are likely to be within 6 percent of equity even for the more aggressive investors among the life insurance companies.
Mobrez noted that Asia as a whole requires fiscal discipline from investors rather than overaggressive investment.
“Financial balance is a key element in Asia. Investors have to look at that,” Mobrez said. “Investors have to walk into Asia with open eyes, rather than the belief that they just have to invest for the sake of investing.”