Does Pokemon Go Benefit Retail Malls?

The craze is here! More than 100 million downloaded!

If you hadn't heard of it, you deserved to be poke (pun intended). It's POKEMON GO!

There have been talk of accidents happening (it's true) because of people not paying attention to their surroundings and also businesses using it to generate sales.


Most of the PokeStops and gyms are outdoor places like shopping malls, transport points like MRT stations and bus stations, playgrounds, schools, tourist attractions and even places of worship.

Does it really benefit businesses? Let's look at shopping malls since I noticed an increase in visitors to shopping malls today. The increase in visitors today could be due to a short school day and working day for some adults.

I have used the word "visitors" because I consider you as a shopper only if you spend money. Increased traffic at a shopping mall is inconsequential if there is no corresponding increase in sales. If people are using the shopping mall as a thoroughfare or to get Poke Balls, there is no increase in sales.

Visitors ~> Converted Shoppers ~> Increased Sales

How then can a shopping mall or retail shop or F&B outlet encourage you to spend? The answer is not so straightforward.

For a shopping mall, they can use "lure" to increase the attractiveness of the PokeStop. "Lure" will increase the spawn rate for Pokemon monsters thereby attracting more people to the PokeStop.

The downside is that people do not need to go into the shopping mall to catch the monsters. All they need is to be nearby. Mall operators will likely have to run Pokemon events inside the mall to attract people in. For example, work with the game developer Niantic to release a rare Pokemon monster in the mall.

Retail shops selling Pokemon items are already benefiting before the launch in Singapore. I noticed an increase in sales of such items. For other types of retailers, I do not see a need for them to run any type of Pokemon promotion. As long as people visiting the mall sees the promotion and are interested, they will buy. Therefore they can just continue business as usual.

F&B operators will experience a mixed bag of fortunes. When people are tired moving around or hungry, they will stop for a bite or drink, translating into more sales. But F&B operators want a high table turnover rate because it translates into higher sales. If the people sit around longer than usual, the F&B operators suffer. I have seen a whole table of people having meals and drinks while talking about Pokemon Go. They seem to be in another world, oblivious to people who are waiting for a seat or table.


Now, will transport operators benefit? Maybe not. If your moving speed is above 15km/h, you are not clocking steps to hatch an egg. If you are taking a train, a reduced catch rate and higher escape rate is observed. I have personally experienced that.



The bad side of Pokemon Go is that there are increased instances of people and even vehicles stopping suddenly to catch a monster.

The good side is that the malls have a higher probability of getting more visitors. But these people must be converted to shoppers in order to benefit from Pokemon Go. But isn't that what they are doing now? So is there a need to go beyond and above what they are doing?


On the other hand, I do see tourist attractions like the Singapore Zoo benefiting from Pokemon Go. Why?
1. Such attractions are usually big enough that the PokeStop is deep inside and people have to buy a ticket to reach the PokeStop.
2. Once people pay to enter, they are unlikely to leave immediately.
3. When they stay, they will spend money on F&B.


On a side note, the public agencies like Active SG and Health Promotion Board should take a leaf from Niantic. There is no need to organise activities or give vouchers to encourage people to move around and live an active lifestyle.


Psst - you are more likely to find a rare monster outdoor than indoor. So please go out.

Investment Opportunities in Jurong Lake District

The Jurong Lake District (JLD) got a fresh impetus from the Government this week as a choice investment location. The Urban Redevelopment Authority (URA) called a tender to develop a Master Plan for JLD. The developer and marketing agents for Lake Grande (slated to launch in July) surely will be cheering this news.

But the question to be answered (agents for Lake Grande will not be telling you) is "Are there other investment options better than Lake Grande".

For comparison purposes, we shall look at developments near to Lakeside and Chinese Garden MRT stations which are not more than 10 years old.

Let's take a look at where Lake Grande is located. Just beside Lake Grande is The Lakeshore, a 848-unit development completed in 2007. Further West lies The Lakefront Residences, a 629-unit development completed in 2014; Caspian, a 712-unit development completed in 2013; and Lakeholmz, a 369-unit development completed in 2005. There is no development which fits the 10 years criteria around Chinese Garden MRT.

Below is the unit size and estimated price for Lake Grande. On a per sq ft basis, it is between $1,300 and $1,400 psf.

Type	Size (sq ft)	Price (from)
1 bedroom	409 to 517	$580k
2 bedroom	614 to 861	$810k
3 bedroom	904 to 980	$1.18m
4 bedroom	1,152 to 1,173	$1.5m
5 bedroom	1,302	$1.69m

Source: Marketing agents

Is this price reasonable? What are the recent transacted prices in the area? The table below is organised in order of the "newness" of the development - uncompleted first, followed by most recent completion and so on.

Transacted Prices of Residential Units near Lake Grande (January to July 2016)

	Lakeville	The Lakefront Residences	Caspian	The Lakeshore	Lakeholmz
Price (psf)	$1,133 to $1,397	$1,265 to $1,363	$949 to $1,119	$961 to $1,068	$715 to $1,103
Unit Size	936 to 1,324	710 to 1,012	872 to 1,593	861 to 1,270	1,249 to 1,706

Note that there are fewer than 10 transactions for all developments except for Lakeville
Source: URA

It appears that Lake Grande is priced higher than its next door development, Lakeville, both which are from the same developer. A "premium" for newness?

The Lakeshore which is beside Lake Grande, is almost ten years old but priced by around 25% cheaper than Lake Grande. Certain units in blk 29 and 31 have an unblocked view of Jurong Lake. Also current asking prices are very close to transacted prices which means these are serious sellers.

The Lakefront Residences is priced very close to Lake Grande. I will not recommend unless the unit comes with a committed tenancy. Current asking rent for The Lakefront Residences is around $3,000 to $3,500 per month for a 2 bedroom unit.

If you do not mind buying a resale condominium unit, I dare say there are good buys out there. Just keep an open mind, do some research and not rely fully on what the agent says.

When will the Cooling Measures be Removed?

Recently there have been many calls to remove or tweak the cooling measures. But the Government has also repeatedly said it will stay for now and they have a rough idea when to remove it.

The question on everyone's mind is when.

Let me try to second guess that.

According to official numbers from the Urban Redevelopment Authority, property prices have risen some 62% from the trough in 2Q 2009 to the peak in 3Q 2013. In pure numbers, it means if property price on a per sq ft basis is $1,000 in 2009, it would have risen to $1,620 psf in 2013.

 
Source: URA

How much has property prices fallen based on the official price index? Around 9.1% as per the flash estimate for 1Q 2016. It means prices now are around $1,472 psf. Compared to the trough in 2Q 2009, prices are still 47% higher.

This also means property prices have appreciated on average 8% per year from 2009 to 2015. Have our economy grew on average 8% per year over the same period? The answer is no. So property prices have ran ahead of the economy.

So that is probably why the Government is not doing anything.

My guess is a comfortable range in the mind of the Government will be between 15 and 20% fall from the peak. If prices did indeed fall by this amount, the average price appreciation per annum is between 4 and 5%. This price appreciation is closer than economic growth.

	15% from Peak	20% from Peak
Estimated Property Prices at end 2016	$1,377 psf	$1,296 psf
Average Price Appreciation per annum	5.4%	4.2%

Source: Real Property Advisory Singapore

When will that happen? Again my guess is by the end of 2016 because 2016 will see the largest number of unit completed.