Retail rents in Singapore stabilising

Positive consumer sentiment and the Great Singapore Sale have provided some support for the retail property market in Singapore, according to property consultants DTZ.

It said given the general uncertain global outlook, tenants have resisted committing to higher rents, and this has kept the retail sector stable during the second quarter.

Going forward, analysts said they see at most a marginal increase of 2 to 3 per cent in rents for the rest of this year.

313@Somerset is part of the new wave of malls making a splash in Orchard Road. All together, some 5.4 million square feet of new retail space will be available by 2012.

Analysts said these new malls will lead the retail property rental market, while older ones will see rents stabilise at current levels, with little upside.

Donald Han, Managing Director, Cushman & Wakefield, said: “The new malls are looking at rentals higher than existing malls at Orchard Road. They’re looking at anything from 20-30 per cent higher. Prime retail space is always in demand.”

Cushman & Wakefield noted that there is little risk of oversupply as international retailers clamour for a piece of the Singapore market.

And although inflation may dampen domestic consumer spending, analysts said external demand from strong tourist arrivals is likely to offset that.

Mr Han said: “Into the next six months with the F1 arriving in September, we’ll only see a higher number of tourists on shore, which will effectively see higher tourism receipts, (a) positive spillover in spite of high inflation numbers over the next six months or so.”

With more malls fighting over the same tourism dollar, analysts said malls are starting to work harder to attract customers.

Turner Canning, Associate Director, Retail Consulting, Cushman & Wakefield, said: “(There is) a lot of criticism (that)… a lot of malls are cookie cutter, (with) similar shops, just in different configurations. You’re going to see that changing. It’s a global trend that malls are becoming more themed.”

Bringing in new retail choices is also another trend.

Chua Chor Hoon, Senior Director, Research, DTZ, said: “We notice that there are more new second-line brands coming, like Just Cavalli, which is a second line to Robert Cavalli. Emporio Armani is also coming. There are also more luxury brands from Europe coming here.”

This is in line with efforts by the Singapore Tourism Board to rejuvenate Orchard Road, turning it into one of the world’s premier shopping belts.

Analysts also said there is no fear that the Orchard belt will cannibalise suburban malls, as they serve different markets.

Ms Chua said: “The suburban malls… are in the heartlands, near residents. (They are) easily accessible. They serve residents’ daily needs, like groceries, daily wear necessities, personal services. These are complementary. In fact, the rentals in suburban malls can be as high as those in Orchard.” – CNA/ms

Source : Channel NewsAsia – 4 Jul 2008

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