If shopping malls seem to be a little more crowded these days, this is probably because retail space is not keeping up with the growth in population here.
According to a Savills Research report, retail space per capita is estimated to have dropped to 7 sq ft from 8 sq ft over the past decade – and this is not taking into consideration the spike in visitor arrivals and a surge in supply.
While retail supply has increased at a compounding rate of 0.9 per cent over the last 10 years, Singapore’s population has risen 2.3 per cent. There have been several openings recently, including Forever 21’s largest flagship store in Orchard Exchange and Swedish retailer Hennes & Mauritz in Orchard Building. Scotts Square is scheduled to open next month with luxury brands such as Hermes and Michael Kors.
With such strong demand, rents have increased for prime retail space. However, with the threat of an economic slowdown, Savills says short-term rental growth may be affected. Monthly fees for prime spots along Orchard Road rose 2 per cent to S$35.1 psf in the third quarter of the year, while prime suburban rents increased 1 per cent to S$30.5 psf.
Rents for space in Orchard Road are more likely to hold firm in light of potential retail sales from the festive year-end season. However, the outlook is slightly gloomier for suburban mall owners, who are expected to face stiffer competition from new entrants in areas such as East Coast Road, Changi Business Park and Jurong.
Almost 2 million sq ft of retail space are to be released in the outlying regions between now and 2014.
Source : Today – 22 Oct 2011