Shopping mall rents set to fall in 2015: Savills

Rents for shops and restaurants in Singapore are expected to fall this year, with prime rents on Orchard Road forecast to recede by 3 to 5 per cent and rents in suburban malls by up to 3.0 per cent, real estate services firm Savills said in a report on Wednesday (Feb 11).

“It appears that landlords in the prime shopping districts are beginning to hold out olive branches to retailers, many of whom are confronted with the twin woes of higher fixed costs and lower sales,” said Mr Alan Cheong, Savills Research senior director for Singapore, in the report.

Much of the new retail space coming onto the market in 2015 will be in central areas, unlike in 2014 when most of the new supply was in suburban areas.

Developments with large retail areas that are slated to open this year include Capitol, the National Gallery Singapore and South Beach.

Singapore retailers have been hurt by rising labour costs and falling visitor arrivals. The latest available data showed retail sales excluding motor vehicles dipping 0.4 per cent year-on-year in Nov 2013, while the Singapore Tourism Board said that international visitor arrivals totalled 15.1 million last year, a 3.1 per cent drop from 2013’s record figure of 15.6 million.

Savills, however, expects vacancy rates at malls to remain low this year as any easing of rents would see revived interest from potential tenants.

For the fourth quarter of 2014, Savills estimates prime retail rents on Orchard Road will be moderated by 5.0 per cent from the third quarter to S$32.90 per square feet per month – the first decline after four consecutive lull quarters.

But prime suburban mall rents are expected to hold firm at S$31.10 per square feet per month, as businesses remain resilient in malls that serve a large population catchment.

Source : Channel NewsAsia – 11 Feb 2015

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