Business Times: Tue, Dec 21
THE COMPLETION of over four million sq ft of retail space in Singapore in the past two years kept the lid on retail rents as a whole here this year.
The worst hit market segment this year is the city area outside of Orchard/Scotts Road covering places such as Marina Centre/Bay and Raffles City, where the average gross monthly rental value for prime first-storey space fell 2 per cent for the whole of this year to $23.90 per square foot in Q4 2010 from $24.40 psf in Q4 2009, says property consulting group DTZ.
The fourth quarter of 2010 alone saw a 0.8 per cent quarter-on-quarter slide. This marked the third consecutive quarterly dip for these locations, which remained dogged by supply pressure with the opening of The Shoppes at Marina Bay Sands, Marina Bay Link Mall and Esplanade Xchange this year.
'Malls in the other city areas will continue to feel the brunt of ongoing developments in the area,' said DTZ South-east Asia research head Chua Chor Hoon.
'New retail space from developments in the next two years, such as Gardens by the Bay, Asia Square I and the second phase of Marina Bay Link Mall will continue to put pressure on the rents of surrounding malls,' she added.
In the Orchard/Scotts Road location, the average monthly rent for prime first-storey space rose a marginal 0.3 per cent quarter on quarter to $39.80 psf in Q4 2010 after staying flat for four consecutive quarters.
The full-year 2010 increase was also 0.3 per cent.
Commenting on the small rise posted for the fourth quarter in Singapore's prime shopping belt, DTZ said: 'With the opening of five major malls in 2009 and 2010 in the Orchard/Scotts Road area, there will be little new supply coming on stream in 2011 and 2012 along the premier shopping street. This is giving rents a boost as demand catches up with supply.'
The group's data also showed that the average monthly rent for prime ground floor suburban mall space inched up 0.3 per cent quarter on quarter to $33.70 psf in Q4 2010. The full-year rise was 0.6 per cent.
'Demand for space in the suburban areas continued to be robust, despite the unveiling of major malls like nex which soft opened in Q4 2010 as well as Clementi Mall, which will open early next year. With rising employment and wage increases, suburban malls continue to benefit from their immediate catchment of residents,' DTZ said.