Orchard Rd rents expected to remain stable in Q4: CBRE

Real estate consultancy firm CBRE expects prime Orchard Road rents to remain stable in the fourth quarter of 2011.

It added that a limited supply of retail premises along the shopping belt should continue to keep rents firm next year.

Currently, rents for prime retail space in Orchard Road remained unchanged at S$31.60 psf/mth, up by 4.6 per cent compared to the fourth quarter of 2010.

Letty Lee, director for Retail Services at CBRE, said “The prevailing mood is expected to continue in the first quarter of 2012 as retailers are expected to adopt a wait-and-see attitude. Rents are expected to remain stable in the first three months of 2012 but may see some downward pressure later in the year.”

However, CBRE believes that downward rental adjustment will be moderated by a combination of factors, including healthy retail sales projections, increased tourism, continued demand from various retail trades and limited stock

Some 794,000 square feet of retail space will come on-stream in 2012, of which about 14 per cent will be located in Orchard Road.

This is much lower than the 1.25 million square feet of retail space added to Orchard Road in 2009 with the completion of ION Orchard, Orchard Central, 313 Somerset and the refurbishment of Mandarin Gallery.

CBRE said the dominant retail trend in 2011 was fast fashion with new-to-market brands like H&M, Abercrombie & Fitch and Aeropostale making their first foray into Singapore.

Looking ahead, CBRE expects these brands to make their presence felt in the heartlands as they gradually expand into the suburban malls.

In a separate report, property consultancy firm DTZ said the average gross fixed rents of prime first-storey retail space in Orchard/Scotts road area stayed at S$40.20 psf/mth in the fourth quarter, after rising 0.5 per cent on-quarter previously.

Meanwhile, the rents of comparable retail space in suburban areas remained stable at S$33.70 psf/mth.

DTZ expects rents in the suburban areas to remain flat due to the substantial supply in the pipeline.

DTZ said that from 2012 to 2016, the total potential supply of private retail space, including projects on awarded government land sale sites without planning approval as well as projects in Marina South and Ophir-Rochor, is estimated to be around 4.6 million sq ft of net lettable area.

It added that more than half of the potential supply or around 2.7 million square feet of net lettable area will be in the suburban areas.

The west region will see a few major shopping centres which account for around 43 per cent of the potential supply in the suburban areas.

These include three retail developments in Jurong Gateway – JCube (the former Jurong Entertainment Centre) by CapitaMall Trust, Jem by Lend Lease and CapitaLand Group’s neighbouring project.

Source : Channel NewsAsia – 21 Dec 2011

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