Branches only occupy 750,000 sqft of space in Singapore.
It’s time to say goodbye to the brick and mortar bank branches as banks in the city-state find it cheaper and more efficient to utilise online estates with their digitization efforts.
According to a report by Jefferies, mobile banking habits of millennials are well set, technology is becoming more affordable, and marginal cost to income ratios for digital channels are far lower than traditional channels.
“As such, there will be less need for physical branch presence over time. There are an estimated 300-350 bank branches in Singapore occupying an estimated 600K - 750K sq. ft. of real estate space with most of it spread across retail malls,” the report noted.
To put it into perspective, branches occupy a space equal to that of Ion Orchard. Services also form about 3.5-7% of gross rental income of retail landlords, the bulk of it coming from street-level bank branches.
“It has been tough going for retailers and retail landlords with government intending to increase e-commerce from 3% of retail sales to about 10% by 2020 and focusing on automation which will entail more capex,” the report noted.
“Now with digital banking, retail landlords may find yet another source of mini-anchor up in the air,” the report added.
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