Singapore’s retail leasing market remained active in the first half of this year, underpinned by stable economic growth, a low-unemployment rate and healthy consumer spending.
According to property consultants, CB Richard Ellis, the monthly average rent for Prime Orchard Road space remained at $30.10 per square foot per month in the second quarter, unchanged from the previous quarter.
On the whole, Prime Orchard Road rents contracted marginally by 0.5 per cent in the first half of the year.
Prime Suburban rents dipped to S$28.90 per square foot per month in the second quarter compared to S$29.10 per square foot per month in the previous quarter, possibly due to competition from imminent supply.
For the first half of 2011, Prime Suburban rents declined by 0.7 per cent.
CBRE said the government has been ensuring a steady flow of retail supply pipeline is made available in the suburban and decentralised regions.
It estimates confirmed retail supply totals about 4.3 million square feet in the next four years and beyond.
Of this, 13.2 per cent or 566,000 square feet will be located in Orchard Road – a quantum that is less than the total net lettable area of the recently completed Nex mall at Serangoon Central.
CBRE said the bulk or 55.2 per cent of retail supply will be completing in the suburbs.
Notably, some 1.2 million square feet will be coming up within the 1-km radius range from the Jurong East MRT station by 2015.
This will come from Lend Lease’s project, CapitaLand’s Boon Lay Way project and JCube as well as ancillary retail space within the Jurong Hospital.
This would effectively boost the private retail stock in the Jurong East area from about 900,000 square feet currently to 2.1 million square feet, reflecting an increase of 132 per cent.
For comparison, Tampines Central in the east has about 1.1 million square feet of mall space.
CBRE said it may be timely for the government to take note that the 10-year take-up for retail space islandwide averaged 352,000 square feet per annum and as such, to adjust the supply flow accordingly.
CBRE’s director for retail services, Letty Lee said her firm remains positive about the eventual take-up rate at Jurong Gateway, given that retail demand is somewhat supply-led locally.
But she added there are concerns about pressures on suburban rents given the increase in supply.
However, Ms Lee said well-managed malls and necessity trades should continue to flourish and as such, retailers could also take the opportunity to expand their retail network.
Source : Channel NewsAsia – 30 Jun 2011